Top-rated municipal bonds were mixed at mid-session, traders said, as the large Texas Water Board deal was priced for retail investors.
Traders were also keeping a wary eye on the Federal Reserve, which will be gathering in Washington for its monetary policy meeting midweek.
Primary Market
Bank of America Merrill Lynch priced the Texas Water Development Board's $591.74 million of Series 2016 Master Trust State Water Implementation Revenue Fund for Texas revenue bonds for retail investors on Monday. The deal will be priced for institutions on Tuesday.
The issue was priced to yield from 0.80% with a 4% coupon in 2018 to 2.98% with a 3% coupon in a split half of a 2036 maturity; a split half of a 2046 maturity was priced as 4s to yield 2.76% and a split half of a 2051 maturity was priced as 3 1/2s to yield 3.11%. A 2017 maturity was offered as a sealed bid. No retail orders were taken in the 2028-2029 and 2031-2032 maturities, a split half of a 2034 maturity, 2035, a split half of a 2036 maturity, a split half of a 2041 maturity, a split half of a 2046 maturity, the 2047 maturity or a split half of a 2051 maturity.
The SWIRFT bonds are rated triple-A by S&P Global Ratings and Fitch Ratings.
On Tuesday, Goldman Sachs is set to price the Pennsylvania Turnpike Commission's $649.89 million of subordinate revenue refunding bonds.
The deal is expected to consist of $391.52 million of Subseries A bonds, $82.17 million of Subseries B taxables and $176.2 million of motor license fund enhanced bonds.
The two Subseries are rated A3 by Moody's and A-minus by Fitch, while the enhanced motor license series is rated A2 by Moody's and A-minus by Fitch.
Barclays Capital is expected to price the Georgia Private Colleges and Universities Authority's $328.78 million of Series 20216A&B revenue bonds for Emory University on Tuesday. The deal is rated Aa2 by Moody's, AA by S&P and AA-plus by Fitch.
In the competitive arena, the New York City Municipal Water Finance Authority is scheduled to competitively sell $200 million of water and sewer system second general resolution revenue bonds on Tuesday. The deal is rated AA-plus by Fitch.
Another New York issuer is coming with the largest competitive sales of the week when the Dormitory Authority of the State of New York sells over $1 billion of bonds on Thursday.
DASNY will offer three separate sales, consisting of $409.16 million Series 2016A Group A state sales tax revenue bonds; $396.83 million of Series 2016A Group C state sales tax revenue bonds; and $310.94 million of Series 2016A Group B state sales tax revenue bonds.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $570.5 million to $13.63 billion on Monday. The total is comprised of $4.29 billion of competitive sales and $9.34 billion of negotiated deals.
Secondary Market
The yield on the 10-year benchmark muni general obligation was steady from 1.57% on Friday, while the yield on the 30-year rose by as much as one basis point from 2.31%, according to a read of Municipal Market Data's triple-A scale.
The Federal Open Market Committee is meeting on Tuesday and Wednesday to decide the course of monetary policy. Most market observers believe the Fed will do nothing to change the fed funds target rate at this meeting, but are divided as to whether the Fed will raise interest rates before the end of this year.
"The September and November meetings are unlikely to produce a rate hike, but the December meeting is still 50-50," said The Bond Buyer's Fed watcher Gary Siegel. "It's really too early to tell about December. Too much can happen between now and then."
Treasuries were little changed on Monday. The yield on the two-year Treasury was flat from 0.77% on Friday, the 10-year Treasury yield declined to 1.69% from 1.70% and the yield on the 30-year Treasury bond decreased to 2.44% from 2.45%.
On Friday, the 10-year muni to Treasury ratio was calculated at 92.5% compared to 92.6% on Thursday, while the 30-year muni to Treasury ratio stood at 94.4% versus 93.6%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 31,350 trades on Friday on volume of $15.38 billion.
Prior Week's Actively Traded Issues
Revenue bonds comprised 53.97% of new issuance in the week ended Sept. 16, up from 51.47% in the previous week, according to
Some of the most actively traded issues by type in the week were from California and Michigan issuers.
In the GO bond sector, the Los Angeles, Calif. 2s of 2017 were traded 29 times. In the revenue bond sector, the Michigan Finance Authority 4s of 2046 were traded 52 times. And in the taxable bond sector, the California Department of Water Resources 2s of 2022 were traded 61 times.
Previous Week's Top Underwriters
The top negotiated and competitive underwriters of last week included Goldman Sachs, Citigroup, JPMorgan Securities, RBC Capital Markets and Bank of America Merrill Lynch, according to Thomson Reuters data. In the week of Sept. 11-Sept. 17, Goldman underwrote $2.21 billion, Citi $1.64 billion, JPMorgan $1.14 billion, RBC $1.04 billion and BAML $1.03 billion.
