Weekly volume in the primary municipal bond market is expected to almost reach $10 billion in what should be the busiest week in 14 weeks – just in time to close out the third quarter on a good note.

Ipreo estimates volume leap up to $9.9 billion from the revised total of $5.37 billion sold in the past week, according to updated figures from Thomson Reuters. The calendar for the week ahead is composed of $7.15 billion of negotiated deals and $2.77 billion in competitive sales.

The last time volume was higher, was the week of June 19 when volume was around $11.8 billion. The coming week has 24 deals scheduled $100 million or larger, with nine of those coming from the competitive route.

“We won’t see a decrease in demand this week as it is a nice and large calendar with a bunch of nice sizable deals,” said Dawn Mangerson, managing director and senior portfolio manager at McDonnell Investment. “With such little supply, everyone has been chasing the same bonds so a wider variety of options should help more people get the full allocation they wanted more than it has been happening.”

Morgan Stanley is scheduled to price the largest deal of the week – Texas Water Development Board’s $1.06 billion of state water implementation revenue fund for Texas revenue bonds on Tuesday. The deal is the largest in the board’s history and carries top-notch ratings of triple-A by S&P Global Ratings and Fitch Ratings.

Bank of America Merrill Lynch is expected to price New Jersey Turnpike Authority’s $579 million of revenue SIFMA LIBOR index bonds also on Tuesday. The deal is rated A2 by Moody’s Investors Service, A-plus by S&P and A by Fitch.

BAML is also slated to price the State of Oregon’s $578 million of full faith and credit tax anticipation notes on Tuesday, following a one-day retail order period. The TANs are rated MIG 1 by Moody’s, SP-1-plus by S&P and F1-plus by Fitch.

RBC Capital Markets is scheduled to run the books on Pennsylvania Economic Development Financing Authority’s $432.915 million of revenue bonds for the University of Pittsburgh Medical Center on Wednesday. The deal is rated A1 by Moody’s, A-plus by S&P and AA-minus by Fitch.

On the competitive side, Washington State is set to sell a total of $528.81 million through three separate sales – including the largest individual competitive sale of $435.025 million on Tuesday. The general obligation various purpose motor vehicle fuel tax and refunding bonds are rated Aa1 by Moody’s and AA-plus by S&P and Fitch.

The State of Minnesota is selling a total of $846.795 million of GO taxable and GO state trunk highway refund and GO various purpose and refunding bonds through five separate sales on Wednesday. The deals carry a rating of triple-A by Fitch.

“Those common, well-known big names general make it easier to participants in the competitive deals,” Mangerson said. “It is the new names or not as familiar names that make it tough.”

Jim Grabovac, senior portfolio manager at McDonnell said that while issuers might want to push deals to get done before the Federal Open Market Committee pushes interest rates again in December, there are too many problem problems hanging up in the air for issuance to spike up in the remaining few months of the year.

“With the ACA, the obvious impact would be on the healthcare sector but it would create lots of problems for states, as they would be more liable,” he said. “Not to mention tax reform as well as plans for infrastructure – lots of potential chaos for the market.”

Adding to that could be another issue not many are talking about, noted Mangerson.

“With so many vacancies on the Treasury board plus the fact that Yellen’s term is up in February, I think that if she is replaced that could be more disruptive to the market as opposed to where rates are going,” she said.

Secondary market
Top-shelf municipal bonds finished stronger on Friday. The yield on the 10-year benchmark muni general obligation fell one basis point to 1.92% from 1.93% on Thursday, while the 30-year GO yield dropped two basis points to 2.78% from 2.80%, according to the final read of Municipal Market Data's triple-A scale.

U.S. Treasuries were mixed on Friday. The yield on the two-year Treasury was unchanged from 1.44% on Thursday, the 10-year Treasury yield declined to 2.26% from 2.27% and the yield on the 30-year Treasury bond decreased to 2.79% from 2.81%.

On Friday, the 10-year muni-to-Treasury ratio was calculated at 85.0% compared with 84.8% on Thursday, while the 30-year muni-to-Treasury ratio stood at 99.5% versus 99.9%, according to MMD.

Week's actively traded issues
Some of the most actively traded bonds by type in the week ended Sept. 22 were from New York and Virginia issuers, according to Markit.

In the GO bond sector, the New York City 3.25s of 2042 were traded 112 times. In the revenue bond sector, the Erie County, N.Y., 2s of 2018 were traded 65 times. And in the taxable bond sector, the University of Virginia 4.179s of 2017 were traded 29 times.

Week's actively quoted issues
New Jersey, New York and Illinois names were among the most actively quoted bonds in the week ended Sept. 22, according to Markit.

On the bid side, the South Jersey Port Corp. taxable 7.365s of 2040 were quoted by 93 unique dealers. On the ask side, the NYC GO 3.25s of 2042 were quoted by 213 dealers. And among two-sided quotes, the Chicago Board of Education taxable 6.138s of 2039 were quoted by 22 unique dealers.

Lipper: Muni bond funds see inflows
Investors in municipal bond funds once again put cash into the funds, according to Lipper data released late Thursday.

The weekly reporters drew $573.978 million of inflows in the week of Sept. 20, after inflows of $241.383 million in the previous week.

Exchange traded funds reported inflows of $26.746 million, after outflows of $71.425 million in the previous week. Ex-EFTs, muni funds saw $547.231 million of inflows, after inflows of $312.807 million in the previous week.

The four-week moving average was positive at $352.562 million, after being in the green at $396.692 million in the previous week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Long-term muni bond funds had inflows of $225.329 million in the latest week after inflows of $289.549 million in the previous week. Intermediate-term funds had inflows of $113.402 million after inflows of $84.525 million in the prior week.

National funds had inflows of $561.769 million after inflows of $347.544 million in the previous week.

High-yield muni funds reported inflows of $133.982 million in the latest week, after inflows of $293.763 million the previous week.

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Aaron Weitzman

Aaron Weitzman

Aaron Weitzman is a markets reporter for The Bond Buyer, focusing on the sell side of the municipal bond market.
Chip Barnett

Chip Barnett

Chip Barnett is a journalist with more than 40 years of experience. Barnett is currently Senior Market Reporter for The Bond Buyer.