Municipal issuers continue to race to market with deals before the calendar turns over, as the tax bill may limit issuance in 2018.

Ipreo estimates volume will inflate to $22.88 billion from the revised total of $13.94 billion sold in the past week, according to updated figures from Thomson Reuters. The calendar for the week ahead is composed of $19.54 billion of negotiated deals and $3.34 billion in competitive sales.

There are 49 deals on the calendar that are $100 million or larger, giving those investors who were unhappy with their allocations last week chance to snatch up as many bonds as they can.

Dawn Mangerson, senior portfolio manager at McDonnell Investment Management, said that the supply surge should continue next week, before tapering off the week of Christmas, as holiday weeks tend to be slow. What's more, she said, the rush-to-market deals may not have enough time after this to close before end of the month.

“There is still pent up demand," she said. "Money keeps flowing in, on top of already cash waiting to be put to work as [investors] look to extend durations and get [their portfolios] on target.People are viewing the increase in volume as a short-term buying opportunity.”

Mangerson said she anticipates lots of investors reaching for yield, amking it easier to sell deals.

“The backup in yields we saw on Friday is a good thing and makes the market more attractive," she said. “We probably won't see as many deals massively bumping yields from pricings to repricing’s like we saw last week, but its shaping up to be another frenzy.”

The Empire State Development Corp. is set to bring $1.78 billion of New York State urban development corporation state personal income tax revenue general purpose bonds via five separate competitive sales on Thursday. The $588.96 million and $436.645 million sales are taxable bonds and the $310.98 million, $228.17 and $216.155 million sales are tax-exempts.

JPMorgan is expected to price the biggest negotiated deal of the week – Partners Healthcare System, Ma.’s, $1.2 billion of revenue bonds on Thursday.

Loop Capital Markets is scheduled to run the books on the New Jersey Turnpike Authority’s $795 million of revenue bonds on Tuesday. The deal is rated A2 by Moody’s Investors Service, A-plus by S&P Global Ratings and A by Fitch Ratings.

JPM is also slated to price Allen County, Ohio’s $724.15 million of hospital facilities revenue and taxable bonds for Mercy Health on Tuesday. The deal is rated A2 by Moody’s, A-plus by S&P and AA-minus by Fitch.

Bank of America Merrill Lynch is expected to price Philadelphia’s $721 million of airport revenue and refunding bonds on Tuesday. The deal is rated A1 by Moody’s and A by S&P and Fitch.

Secondary market
The MBIS municipal non-callable 5% GO benchmark scale was weaker in late trading.

The 10-year muni benchmark yield rose to 2.252% on Friday from the final read of 2.206% on Thursday, according to Municipal Bond Information Services. The MBIS 30-year benchmark muni yield increased to 2.702% from 2.667%.

The MBIS benchmark index is updated hourly on the Bond Buyer Data Workstation.

Top-rated municipal bonds finished weaker on Friday. The yield on the 10-year benchmark muni general obligation rose seven basis points to 1.95% from 1.88% on Thursday, while the 30-year GO yield gained seven basis points to 2.56% from 2.49%, according to the final read of MMD’s triple-A scale.

U.S. Treasuries were little changed on Friday. The yield on the two-year Treasury declined to 1.80% from 1.81%, the 10-year Treasury yield was unchanged from 2.38% and the yield on the 30-year Treasury was steady from 2.77%.

On Friday, the 10-year muni-to-Treasury ratio was calculated at 82.2% compared with 79.3% on Tuesday, while the 30-year muni-to-Treasury ratio stood at 92.4% versus 89.8%, according to MMD.

Week's actively traded issues
Some of the most actively traded bonds by type in the week ended Dec. 8 were from New York, Florida and New Jersey issuers, according to Markit.

In the GO bond sector, the New York City 4s of 2034 were traded 57 times. In the revenue bond sector, the Florida Development Finance Corp. 5.625s of 2047 were traded 116 times. And in the taxable bond sector, the New Jersey Turnpike Authority 3.729s of 2036 were traded 37 times.

Week's actively quoted issues
Puerto Rico, New York and California names were among the most actively quoted bonds in the week ended Dec. 8, according to Markit.

On the bid side, Puerto Rico Commonwealth GO 5s of 2041 were quoted by 74 unique dealers. On the ask side, New York Metropolitan Transportation Authority revenue 3.25s of 2036 were quoted by 264 dealers. And among two-sided quotes, California taxable 7.625s of 2040 were quoted by 23 unique dealers.

Lipper: Muni bond funds saw outflows
Investors in municipal bond funds pulled put cash out of the funds in the latest week, according to Lipper data released on Friday.

The weekly reporters saw $807.203 million of outflows in the week of Dec. 6, after inflows of $100.434 million in the previous week.

Exchange traded funds reported inflows of $127.808 million, after inflows of $61.076 million in the previous week. Ex-ETFs, muni funds saw $935.011 million of outflows, after inflows of $39.358 million in the previous week.

The four-week moving average was positive at $92.547 million, after being in the green at $410.109 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 $140.663 million in the latest week after inflows of $185.461 million in the previous week. Intermediate-term funds had outflows of $285.696 million after inflows of $18.641 million in the prior week.

National funds had outflows of $637.093 million after inflows of $136.295 million in the previous week.

High-yield muni funds reported outflows of $236.365 million in the latest week, after inflows of $71.670 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.