Municipal bonds were stronger ahead of Friday’s early close as the market will be greeted with $3.4 billion of new issue supply next week.

Financial markets will be closed Monday for Memorial Day; trading will resume on Tuesday.

Ipreo estimates next week’s holiday-shortened supply calendar at $3.41 billion, which is down from a revised total of $6.59 billion this week, according to updated data from Thomson Reuters. Next week’s calendar is composed of $2.48 billion of negotiated deals and $930 million of competitive sales.

Primary market
Big transportation issues dominate the new issue calendar next week.

Topping the negotiated sector is a $578 million deal coming from the Metropolitan Washington Airports Authority. Barclays Capital is expected to price the Series 2018 airport system revenue and refunding bonds subject to the alternative minimum tax on Thursday.

On Wednesday, Bank of America Merrill Lynch is expected to price the South Carolina State Port Authority’s $325 million of Series revenue bonds subject to the AMT.

In the competitive arena, the Virginia Transportation Board is selling almost $150 million of Series 2018 transportation capital projects revenue bonds on Thursday.

Bond Buyer 30-day visible supply at $6.95B
The Bond Buyer's 30-day visible supply calendar increased $218.8 million to $6.95 billion on Friday. The total is comprised of $3.48 billion of competitive sales and $3.48 billion of negotiated deals.

Secondary market
Municipal bonds were stronger on Friday, according to a midday read of the MBIS benchmark scale.

Benchmark muni yields fell as much as one basis point in the one- to 30-year maturities. High-grade munis were also stronger with yields calculated on MBIS’ AAA scale falling as much as one basis point all across the curve.

Municipals were also stronger along Municipal Market Data’s AAA benchmark scale, which showed yields falling as much as two basis points in the 10-year general obligation muni and dropping one to three basis points in the 30-year muni maturity.

Treasury bonds were slightly stronger as stocks were trading mixed.

On Thursday, the 10-year muni-to-Treasury ratio was calculated at 84.2% while the 30-year muni-to-Treasury ratio stood at 95.5%, according to MMD. The muni-to-Treasury ratio compares the yield of tax-exempt municipal bonds with the yield of taxable U.S. Treasuries with comparable maturities. If the muni/Treasury ratio is above 100%, munis are yielding more than Treasuries; if it is below 100%, munis are yielding less.

Previous session's activity
The Municipal Securities Rulemaking Board reported 36,639 trades on Thursday on volume of $13.06 billion.

California, New York and Texas were the states with the most trades, with the Golden State taking 20.994% of the market, the Empire State taking 12.193% and the Lone Star State taking 9.497%.

Week's actively traded issues
Some of the most actively traded bonds by type in the week ended May 25 were from Illinois and California issuers, according to Markit.

In the GO bond sector, the Chicago Board of Education 5s of 2035 traded 43 times. In the revenue bond sector, the Regents of the University of California 5s of 2048 traded 50 times. And in the taxable bond sector, the Illinois 5.1s of 2033 traded 17 times.

Week's actively quoted issues
Puerto Rico, Virginia and New York names were among the most actively quoted bonds in the week ended May 25, according to Markit.

On the bid side, the Puerto Rico Public Buildings Authority revenue 5.25s of 2042 were quoted by 38 unique dealers. On the ask side, the Virginia Public School Authority revenue 3.125s of 2034 were quoted by 259 dealers. And among two-sided quotes, the New York Metropolitan Transportation Authority taxable 5.871s of 2039 were quoted by 19 dealers.

Lipper: Muni bond funds saw inflows
Investors in municipal bond funds again showed confidence and put cash into the funds in the latest reporting week, according to Lipper data released on Thursday.

The weekly reporters saw $232.801 million of inflows in the week ended May 16, after inflows of $206.948 million in the previous week.

Exchange traded funds reported inflows of $105.053 million, after outflows of $110.620 million in the previous week. Ex-ETFs, muni funds saw $127.748 million of inflows, after inflows of $317.568 million in the previous week.

The four-week moving average remained positive at $65.590 million, after being in the green at $64.760 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 $154.282 million in the latest week after inflows of $264.239 million in the previous week. Intermediate-term funds had inflows of $141.916 million after inflows of $10.742 million in the prior week.

National funds had inflows of $301.718 million after inflows of $240.367 million in the previous week. High-yield muni funds reported inflows of $166.008 million in the latest week, after inflows of $415.493 million the previous week.

Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Vanessa Kim at 212-803-8474 for more information.

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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.
Aaron Weitzman

Aaron Weitzman

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