Municipal market participants have a better view of the future after the final tax bill was released late Friday afternoon, and know that private activity bonds will be safe but not advance refunding bonds.
The MBIS municipal non-callable 5% GO benchmark scale was stronger in early trading on Monday morning.
The 10-year muni benchmark yield declined to 2.262% from Friday’s final read of 2.274%, according to Municipal Bond Information Services. The MBIS 30-year benchmark muni yield decreased to 2.727% from 2.745%.
The MBIS benchmark index, which is comprised of investment-grade municipal securities, is updated hourly on the Bond Buyer Data Workstation.
U.S. Treasuries were mostly weaker on Monday morning. The yield on the two-year Treasury dipped to 1.75% from 1.84%, the 10-year Treasury yield climbed to 2.37% from 2.36% and the yield on the 30-year Treasury rose to 2.71% from 2.69%.
Top-rated municipal bonds finished mixed on Friday. The yield on the 10-year benchmark muni general obligation was unchanged from 1.99% on Thursday, while the 30-year GO yield rose one basis point to 2.58% from 2.57%, according to the final read of MMD’s triple-A scale.
On Friday, the 10-year muni-to-Treasury ratio was calculated at 84.5% compared with 84.8% on Thursday, while the 30-year muni-to-Treasury ratio stood at 96.0% versus 94.8%, according to MMD.
Prior week's actively traded issues
Revenue bonds comprised 55.23% of new issuance in the week ended Dec. 15, down from 55.93% in the previous week, according to Markit. General obligation bonds made up 38.47% of total issuance, up from 38.20%, while taxable bonds accounted for 6.30%, up from 5.87% a week earlier.
Some of the most actively traded bonds by type were from Connecticut, Michigan and California issuers.
In the GO bond sector, the Connecticut 5s of 2018 were traded 57 times. In the revenue bond sector, the Michigan Finance Authority 5s of 2047 were traded 55 times. And in the taxable bond sector, the San Jose, Calif., Redevelopment Successor Agency 3.375s of 2034 were traded 78 times.
MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 44,094 trades on Friday on volume of $18.712 billion.
Previous week's top underwriters
The top municipal bond underwriters of last week included JPMorgan Securities, Morgan Stanley, Bank of America Merrill Lynch, Goldman Sachs and Citi, according to Thomson Reuters data.
In the week of Dec. 10 to Dec. 16, JPMorgan $2.98 billion, Morgan Stanley $2.68 billion, BAML underwrote $2.26 billion, Goldman $2.13 billion and Citi $1.91 billion.
Now that the uncertainty of tax legislation and how it relates to munis is gone, market participants can focus on the upcoming calendar — as it will most likely be the last big supply week for a while, with Christmas and New Year’s right around the corner.
Ipreo estimates volume will come back down to Earth to $11.14 billion from the revised total of $16.41 billion sold in the past week, according to updated figures from Thomson Reuters. The calendar for the week ahead is composed of $10.98 billion of negotiated deals and $163 million in competitive sales.
This week will be atypical for the primary market, as there are some larger deals scheduled to be priced on Monday.
Goldman Sachs is slated to price New York Metropolitan Transportation Authority’s $608.61 million of revenue refunding bonds. The deal is rated A1 by Moody’s Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.
Morgan Stanley is expected to price San Francisco Public Utility Commission’s $408.955 million of water revenue bonds. The deal is rated Aa3 by Moody’s and AA-minus by S&P.
Bank of America Merrill Lynch is scheduled to price Indiana Finance Authority’s $340 million of health system revenue bonds for the Franciscan Alliance Inc., Obligated Group. The deal is rated Aa3 by Moody’s and AA by Fitch.
Citi is slotted to price Georgia Housing Finance Authority’s $325 million of single family mortgage bonds. The deal is rated triple-A by S&P.
Bond Buyer 30-day visible supply
The Bond Buyer's 30-day visible supply calendar decreased $1.48 billion to $13.97 billion on Monday. The total is comprised of $752 million of competitive sales and $13.22 billion of negotiated deals.
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.