Retail investors hungry for supply nabbed some of the $727 million of general obligation bonds that Massachusetts offered to buyers on Tuesday.
"In general, munis are firm, technically in good shape from a supply/demand perspective and still mostly indifferent to moves in Treasuries which are confined to such a tight range,” one New York trader said. “It’s all about what I like to call ‘needs’ versus ‘wants. Customers need to do certain things at times, however they don’t necessarily want to do make any bets at this time - that pretty much sums up our market right now.”
Primary market
Morgan Stanley priced Massachusetts’ $726.84 million of GO and GO refunding bonds for retail ahead of the institutional pricing on Wednesday.
The financial advisor is PFM and the bond counsel is Mintz Levin.
The deal is rated Aa1 by Moody’s Investors Service, AA by S&P Global Ratings and AA-plus by Fitch Ratings. All three rating agencies assign stable outlooks to the credit.
Citigroup received the official award on the Massachusetts Clean Water Trust’s $163.46 million of Series 21 state revolving fund green bonds.
The financial advisor is PFM and the bond counsel is Hinckley Allen. The deal is rated triple-A by Moody’s, S&P and Fitch.
Bank of America Merrill Lynch priced Fort Smith, Ark.’s $123.65 million of Series 2018 water and sewer refunding and construction revenue bonds.
The deal is rated A by S&P except for the 2022 maturity, which is insured by Build America Mutual and is rated AA by S&P.
Piper Jaffray priced the Texas Public Finance Authority’s $298.175 million of Series 2018 taxable GO and refunding bonds.
The deal is rated triple-A by Moody’s and S&P.
JPMorgan Securities priced the West Virginia Hospital Finance Authority’s $242.09 million of Series 2018A hospital refunding and improvement revenue bonds for the Cabell Huntington Hospital Obligated Group.
The deal is rated Baa1 by Moody’s and BBB-plus by S&P.
In the competitive arena, Florida Department of Transportation Financing Corp. sold $170.085 million of Series 2018 revenue bonds. Raymond James won the bonds with a true interest cost of 2.8284%.
The financial advisor is the Florida Division of Bond Finance and the bond counsel is Greenberg Traurig. The deal is rated Aa1 by Moody’s and AA-plus by S&P and Fitch.
On Wednesday, Washington state is selling $502.13 million of GOs in three offerings. The deals are comprised of $262.915 million of Series 2019A various purpose GOs, $145.78 million of Series 2019T taxable GOs and $93.435 million of Series 2019B motor vehicle fuel tax GOs.
Montague DeRose & Associates and Piper Jaffray are the financial advisors and Foster Pepper is the bond counsel. The deals are rated Aa1 by Moody’s and AA-plus by S&P and Fitch.
Also on Wednesday, Dallas is selling $155.66 million of Series 2018C waterworks and sewer system revenue refunding bonds.
Hilltop Securities and Estrada Hinojosa are the financial advisors and McCall Parkhurst and Escamilla & Poneck are the bond counsel. The deal is rated AAA by S&P and AA-plus by Fitch.
Tuesday’s bond sales
Massachusetts
Florida
Texas
West Virginia
Arkansas
Bond Buyer 30-day visible supply at $8.9B
The Bond Buyer's 30-day visible supply calendar decreased $635.2 million to $8.90 billion for Wednesday. The total is comprised of $4.31 billion of competitive sales and $4.59 billion of negotiated deals.
Prior week's top underwriters
The top municipal bond underwriters of last week included JPMorgan Securities, Citigroup, Raymond James & Associates, RBC Capital Markets and Ziegler, according to Thomson Reuters data.
In the week of Aug. 19 to Aug. 25, JPMorgan underwrote $965.8 million, Citi $391.0 million, Raymond James $332.3 million, RBC $257.9 million, and Ziegler $245.7 million.
Secondary market
Municipal bonds were weaker on Tuesday, according to a late read of the MBIS benchmark scale. Benchmark muni yields rose as much as two basis points in the one- to 30-year maturities.
High-grade munis were also weaker, with yields calculated on MBIS’ AAA scale rising as much as three basis point in one- to 30-year maturities.
Municipals were mixed on Municipal Market Data’s AAA benchmark scale, which showed the yield on the 10-year muni general obligation remaining unchanged while the yield on 30-year muni maturity rose one basis point.
Treasury bonds were stronger as stock prices traded slightly higher.
On Tuesday, the 10-year muni-to-Treasury ratio was calculated at 84.2% while the 30-year muni-to-Treasury ratio stood at 99.2%, according to MMD. The muni-to-Treasury ratio compares the yield of tax-exempt municipal bonds with the yield of taxable U.S. Treasury with comparable maturities. If the muni/Treasury ratio is above 100%, munis are yielding more than Treasury; if it is below 100%, munis are yielding less.
Previous session's activity
The Municipal Securities Rulemaking Board reported 35,048 trades on Monday on volume of $6.89 billion.
California, Texas and New York were the municipalities with the most trades, with Golden State taking 16.981% of the market, the Lone Star State taking 11.581% and the Empire State taking 9.976%.
Prior week's top FAs
The top municipal financial advisors of last week included Swap Financial Group, Columbia Capital Markets, Hilltop Securities, RBC Capital Markets and KNN Public Finance, according to Thomson Reuters data.
In the week of Aug. 19 to Aug. 25, Swap advised on $482.9 million, Columbia also $482.9 million, Hilltop $327.5 million, RBC $274.9 million, and KNN $195.0 million.
Treasury auctions $65B 4-week bills
The Treasury Department Tuesday auctioned $65 billion of four-week bills at a 1.930% high yield, a price of 99.849889.
The coupon equivalent was 1.960%. The bid-to-cover ratio was 2.77.
Tenders at the high rate were allotted 18.31%. The median rate was 1.900%. The low rate was 1.870%.
Treasury sells $37B 5-year notes
Treasury also auctioned $37 billion of five-year notes, with a 2 3/4% coupon, a 2.765% high yield, a price of 99.930401. The bid-to-cover ratio was 2.49.
Tenders at the high yield were allotted 43.94%. All competitive tenders at lower yields were accepted in full. The median yield was 2.721%. The low yield was 2.600%.
Gary Siegel contributed to this report.
Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation.
