The primary muni market is set for nearly $10 billion in weekly volume, as deals from Illinois, New York and California dominate the calendar.

Ipreo estimates volume will grow to $9.9 billion from the revised total of $4.21 billion sold in the past week, according to updated figures from Thomson Reuters. The calendar for the week ahead is composed of $4.34 billion of negotiated deals and $5.60 billion in competitive sales.

“It’s shaping up to be a busy week, with the elevated supply and the reoccurring theme of lots of money around,” said one New York trader. “There is truly a variety of options, with big name states, healthcare and education as well as credit quality options from top-tier [AAA] to Baa3.”

The New York City Transitional Finance Authority is scheduled to bring $1 billion to market Wednesday, with an $850 million negotiated component and the remainder offered competitively. Goldman Sachs will run the books on the negotiated deal after a two-day retail period. The future tax secured subordinate bonds are rated Aa1 by Moody’s Investors Service and AAA by S&P Global Ratings and Fitch Ratings.

Citi is slated to price the Berks County Industrial Development Authority’s $575 million of health system revenue bonds for Tower Health on Tuesday. The deal is rated A3 by Moody’s and A by S&P and Fitch.

California is on the docket to bring a total of $1.59 billion in three separate sales on Tuesday. It is anticipated to be $557.215 million of various purpose general obligation and refunding bonds and $522.53 million of various purpose GO and refunding bonds, as well as $508.57 million of taxable various purpose GO bonds. All three deals are rated Aa3 by Moody’s and AA-minus by S&P and Fitch.

Also on Tuesday, Illinois is slated to come with $1.5 billion of GO in three competitive sales. They are all rated Baa3 by Moody’s, BBB-minus by S&P and BBB by Fitch.

Some market sources said that Illinois -- despite the size of the deal, should be helped by general the lack of paper in the market recently and fact that its cash flow borrowing is limited to a 12-year maturity.
One Midwest trader said that these three sales are really just a prelude to the biggie the following week.

“Although it will be interesting to see how deal is priced, the true test will be the huge negotiated deal that should come next week,” he said. “I feel like the state would have done all negotiated but its GO statutes require 25% of debt in a fiscal year to be done.”

Secondary market
Top-shelf municipal bonds finished stronger on Friday. The yield on the 10-year benchmark muni general obligation fell two basis points to 1.96% from 1.98% on Thursday, while the 30-year GO yield dropped four basis points to 2.74% from 2.78%, according to the final read of Municipal Market Data's triple-A scale.

U.S. Treasuries were stronger on Friday. The yield on the two-year Treasury dropped to 1.50% from 1.51% on Thursday, the 10-year Treasury yield fell to 2.28% from 2.32% and yield on the 30-year Treasury bond decreased to 2.81% from 2.88%.

On Friday, the 10-year muni-to-Treasury ratio was calculated at 86.0% compared with 85.3% on Thursday, while the 30-year muni-to-Treasury ratio stood at 97.2% versus 97.5%, according to MMD.

AP-MBIS 10-year muni dips to 2.29%

The Associated Press-MBIS 10-year municipal benchmark 5% general obligation was at 2.29% late Friday, down from the final read of 2.30% on Thursday, according to Municipal Bond Information Services, a national consortium of municipal interdealer brokers.

The AP-MBIS index is a yield curve built on market data aggregated from MBIS member firms and will be updated hourly on the forthcoming Bond Buyer Data Workstation.

Week's actively traded issues
Some of the most actively traded bonds by type in the week ended Oct. 13 were from Puerto Rico, California and Illinois issuers, according to Markit.

In the GO bond sector, the Puerto Rico Commonwealth 8s of 2035 were traded 28 times. In the revenue bond sector, the San Francisco Airports Commission 5s of 2047 were traded 73 times. And in the taxable bond sector, the Illinois 5.1s of 2033 were traded 17 times.

Week's actively quoted issues
Puerto Rico and California names were among the most actively quoted bonds in the week ended Oct. 13, according to Markit.

On the bid side, the Puerto Rico Highway and Transportation Authority revenue 4.75s of 2038 were quoted by 73 unique dealers. On the ask side, the California taxable 7.5s of 2034 were quoted by 70 dealers. And among two-sided quotes, the Puerto Rico Commonwealth GO 8s of 2035 were quoted by 23 unique dealers.

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

The weekly reporters saw $43.576 million of inflows in the week of Oct. 11, after outflows of $140.336 million in the previous week.

Exchange traded funds reported inflows of $104.014 million, after inflows of $72.007 million in the previous week. Ex-EFTs, muni funds saw $60.438 million of outflows, after outflows of $212.343 million in the previous week.

The four-week moving average was positive at $213.857 million, after being in the green at $263.309 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 outflows of $84.362 million in the latest week after outflows of $136.354 million in the previous week. Intermediate-term funds had inflows of $108.248 million after inflows of $117.108 million in the prior week.

National funds had inflows of $230.791 million after inflows of $58.823 million in the previous week.

High-yield muni funds reported outflows of $93.973 million in the latest week, after outflows of $13.655 million the previous week.


Data appearing in this article from Municipal Bond Information Services, including the AP-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 212-803-8372 for more information.

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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.