Municipals were little changed in secondary trading Tuesday as the primary market took focus with a slew of deals, led by a $1.9 billion Novant healthcare revenue bond deal in the negotiated market and a general obligation sale from gilt-edged Delaware. U.S. Treasuries were weaker, and equities sold off.
Municipals were cut up to two basis points, depending on the scale, while UST yields rose up to seven basis points, pushing the two-year UST above 5% for the first time since mid-November.
The two-year muni-to-Treasury ratio Tuesday was at 64%, the three-year at 63%, the five-year at 61%, the 10-year at 60% and the 30-year at 83%, according to Refinitiv Municipal Market Data's 3 p.m. EST read. ICE Data Services had the two-year at 65%, the three-year at 64%, the five-year at 62%, the 10-year at 62% and the 30-year at 83% at 3:30 p.m.
While munis were mostly steady Tuesday, yields have risen over the past several weeks as "larger supply is part of a strong [year-to-date] trend for tax-exempts," said Matt Fabian, a partner at Municipal Market Analytics.
The 10-year MMD yield has risen 35 basis points since March 1, and longer yields are hovering around 4%.
"Those are levels that, with spread, can get retail buyers comfortable buying again, which seems already to be happening based on Street commentary and media headlines," Fabian said.
There was around $5 billion in customer net buying activity last Wednesday through Friday, he said, noting the surge in issuance is "providing opportunities and investors [are] taking them," he said.•
Fabian said the "average trade sizes for customer purchases have remained well within recent, mostly non-institutional sizes, while customer sales have reflected even smaller lot liquidations."
In the primary market Tuesday, J.P. Morgan priced and repriced for the South Carolina Jobs-Economic Development Authority (A1/A+/AA-/) $1.908 billion of Novant Health Obligated Group healthcare facilities revenue bonds, Series 2024A, with larger bumps out long from the preliminary pricing: 5s of 11/2031 at 3.37% (-2), 5s of 2034 at 3.50% (unch), 5s of 2039 at 3.88% (-3), 5.25s of 2044 at 4.26% (-3), 5.5s of 2049 at 4.40% (-11), 5.5s of 2054 at 4.47% (-9) and 4.5s of 2054 at 4.68% (-3), callable 5/1/2034.
Siebert Williams Shank priced for institutions an upsized $747.960 million of consolidated bonds, Two Hundred Forty-Fourth Series, from the Port Authority of New York and New Jersey's (Aa3/AA-/AA-/), with bumps from Monday's retail pricing: 5s of 7/2030 at 2.90% (-12), 5s of 2034 at 2.99% (-7), 5s of 2039 at 3.43% (-6), 5s of 2044 at 3.90% (-8), 5s of 2049 at 4.12% (-11) and 5s of 2054 at 4.20% (-11), callable 7/1/2034. The issuer had $900 million in retail orders.
Jefferies priced and repriced for the Board of Regents of the Texas A&M University System (Aaa/AAA/AAA/) $428.085 million of revenue financing system bonds, Series 2024A, with small bumps from the preliminary pricing: 5s of 5/2025 at 3.46% (-5), 5s of 2029 at 3.02% (-3), 5s of 2034 at 3.04% (-3), 5s of 2039 at 3.46% (unch), 4s of 2044 at 4.17% (-2), 5s of 2049 at 4.29% )4_ and 4.125s of 2054 at 4.38% (-3), callable 5/15/2034.
Jefferies priced for the Illinois Housing Development Authority (Aaa///) $228.5 million of taxable social revenue bonds, 2024 Series D, with all bonds pricing at par — 5.314s of 4/2025, 5.044s of 4/2029, 5.094s of 10/2029, 5.593s of 4/2034, 5.643s of 10/2034, 5.893s of 10/2039, 6.051s of 10/2044, 6.101s of 10/2049 and 6.151s of 10/2054 — except for 6.26s of 10/2054 at 5.894%, callable 10/1/2032.
J.P. Morgan priced for the New Jersey Health Care Facilities Financing Authority (A2/A-/A/) is set to price Tuesday $164.075 million of Department of Human Services lease revenue refunding bonds, Series 2024. The first tranche, $109.975 million for the Greystone Park Psychiatric Hospital Project, saw 5s of 9/2024 at 3.85%, 5s of 2029 at 3.32% and 5s of 2033 at 3.28%, noncall.
The second tranche, $54.1 million for the Marlboro Psychiatric Hospital Project, saw 5s of 9/2024 at 3.85%, 5s of 2029 at 3.32% and 5s of 2033 at 3.28%, noncall.
Raymond James preliminarily priced for the
In the competitive market, Delaware (Aaa/AAA/AAA/) sold $290.015 million of GO school bonds, Series 2024A, to Morgan Stanley, with 5s of 5/2025 at 3.42%, 5s of 2029 at 2.85%, 5s of 2034 at 2.85%, 5s of 2039 at 3.29% and 4s of 2044 at 4.09%, callable 5/1/2034.
The state also sold $69.280 million of GO refunding bonds, Series 2024B, to Truist Securities, with 5s of 7/2025 at 3.38%, 5s of 2028 at 2.92% and 5s of 2034 at 2.85%, noncall.
Anders S. Persson, Nuveen's chief investment officer for global fixed income, and Daniel J. Close, Nuveen's head of municipals, said they expected the "muni market to stabilize as new-issuance subsides and investors spend the May 1 coupon reinvestment."
"Outsized muni bond reinvestment income is projected to be approximately $100 billion through the summer," they said.
There will be $25 billion on May 1, $36 billion on June 1 and $37 billion on July 1, Persson and Close said, noting announced bond calls will increase these figures.
Elsewhere, "fund NAV returns, led by high yield strategies, are having a poor few weeks; funds will have to entice despite TRR," according to Fabian.
Banks keep "backpedaling" their muni holdings and are unlikely to "emerge as value buyers short of a rise in the corporate tax rate or a major upset in securities prices," he said.
"Or, perhaps, via an unexpected move to dovish by the FOMC this week, or indirectly if job creation shows; data loom this week," Fabian said.
AAA scales
Refinitiv MMD's scale was unchanged: The one-year was at 3.45% and 3.22% in two years. The five-year was at 2.85%, the 10-year at 2.81% and the 30-year at 3.96% at 3 p.m.
The ICE AAA yield curve was cut up to two basis points: 3.42% (-1) in 2025 and 3.23% (unch) in 2026. The five-year was at 2.88% (+2), the 10-year was at 2.84% (+1) and the 30-year was at 3.91% (+1) at 3:30 p.m.
The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 3.46% in 2025 and 3.23% in 2026. The five-year was at 2.84%, the 10-year was at 2.84% and the 30-year yield was at 3.94%, according to a 3 p.m. read.
Bloomberg BVAL was unchanged: 3.47% in 2025 and 3.26% in 2026. The five-year at 2.79%, the 10-year at 2.78% and the 30-year at 3.96% at 3:30 p.m.
Treasuries were weaker.
The two-year UST was yielding 5.040% (+6), the three-year was at 4.879% (+7), the five-year at 4.720% (+7), the 10-year at 4.687% (+6), the 20-year at 4.906% (+4) and the 30-year at 4.792% (+4) at 3:30 p.m.
Negotiated calendar
The New Jersey Higher Education Student Assistance Authority is set to price Thursday $226.550 million of student loan revenue and refunding bonds, Series 2024, consisting of $24.8 million of Series A (/AA//), serials 2027-2033; $176 million of Series B (/AA//), serials 2027-2033, term 2045, and $25.75 million of Series C (/BBB//), serial 2054. RBC Capital Markets.
Fort Bend County, Texas, (/AA//) is set to price Wednesday $123.74 million of senior lien toll road revenue and refunding bonds, Series 2024. Mesirow Financial.
Competitive
The Nauset Regional School District, Massachusetts, is set to sell $120.5 million of unlimited tax GO school bonds, at 11 a.m. Thursday.
The Washoe County School District, Nevada, (Aa3/AA//) is set to sell $130 million of limited tax GO school improvement bonds, Series 2024A, at 11:30 a.m. Thursday.
