Municipals continued to improve Tuesday in constructive secondary trading while a retail pricing of $950 million for the New York City Transitional Finance Authority took focus in the primary. U.S. Treasuries were slightly firmer out long and equities rallied.
Triple-A yields fell up to four basis points, depending on the curve, while U.S. Treasuries were mixed.
The two-year muni-to-Treasury ratio Tuesday was at 60%, the three-year at 63%, the five-year at 63%, the 10-year at 67% and the 30-year at 90%, according to Refinitiv MMD's 3 p.m. read. ICE Data Services had the two-year at 61%, the three-year at 63%, the five-year at 62%, the 10-year at 67% and the 30-year at 89% at 4 p.m.
The back half of July is starting "much like the front half with ongoing UST volatility and municipal supply staying in the forefront," said Kim Olsan, senior vice president of municipal bond trading at FHN Financial.
Olsan noted that aside from "low-end ratios" in the first 15 years of the curve, bid list tallies are also being impacted "with totals that encompass more esoteric structures or credits."
During the first half of the year, daily bid volume was at $1.1 billion, per Bloomberg data, and that volume was partially driven by the Federal Deposit Insurance Corp. lists that "added several billion par value to the Q2 figure," she said.
By contrast, July's daily average is down 23% at $861 million, Olsan noted.
July's redemption credits seem "to be supplying enough cash for syndicate settlement needs, negating large-scale cash raises," she said.
The trickle-down effect "is a layer of support for the market — absent large call and maturity values — that defies the relative value challenge," Olsan said.
As the market has improved in recent sessions, she said "the loss of a 3% handle in highly rated one-year tenors," which made up a big portion of the FDIC lists, "could stall the momentum that has been sustained in that range (3% yield are already through 60% values to USTs)."
This could mean "a firmer bid for lower-rated names (airports, healthcare) or lower coupons as cash looks for viable alternatives," she said.
Between 2024 and 2033, she said "the inversion has narrowed 30 basis points in the last 90 days, to settle at a current negative 44 basis points."
Due to this, Olsan said there has been a narrowing of credit spreads in secondary bidsides and primary market offerings.
Spread results in new issues point to "tighter yields against generic curves inside 15 years but trending closer to parity in the 20-year range," she said.
A PSF-backed Denton school, Texas, issue "offered its five-year yield at 2.84%, 13 basis points through the implied BVAL PSF yield that day," she said.
In the 10-year maturity, she said "the Denton yield priced nearly on top of the BVAL yield, and in the 20-year tenor the offering yield was the same as the BVAL spot level."
Seattle's Public Utility (Aa2/A) "sold a 2028 maturity at 2.75%, as compared to the BVAL 2.87% AA-rated Utility yield," according to Olsan.
Buyer demand in the 10-year maturity "held the Seattle yield to 2.76%, or seven basis points through the BVAL spot," while the "Seattle 20-year yield matched the BVAL 3.65% yield," she said.
Newport News, Virginia's (Aa1/AA+/), GO sale "drew a five-year yield 13 basis points below that of the respective BVAL AA-rated GO spot and the 10-year yield came at 2.63%, 15 basis points lower than the BVAL comparison," she said.
A 20-year 4% coupon "offered a wider yield of 4.07%, or 43 basis points above the BVAL spot — an ongoing concession in the 4% coupon stack that continues to draw consistent flows," she noted.
In the primary market Tuesday, J.P. Morgan Securities held a one-day retail order for $950 million of tax-exempt future tax-secured subordinate bonds from the New York City Transitional Finance Authority (Aa1/AAA/AAA/), with 5s of 5/2025 at 2.97%, 5s of 2027 at 2.72%, 5s of 2033 at 2.76%, 5s of 2038 at 3.37%, 5s of 2043 at 3.70%, 5s of 2048 at 3.89%, 5s of 2053 at 3.96% and 4s of 2053 at 4.20%, callable 5/1/2033.
Wells Fargo Bank priced for the Santa Clara Valley Transportation Authority, California (Aa2/AAA//), $559.525 million of 2000 Measure A sales tax revenue refunding bonds, Series 2023A, with 5s of 4/2024 at 2.85%, 5s of 2028 at 2.44%, 5s of 2033 at 2.50% and 5s of 2036 at 2.75%, callable 4/1/2033.
Barclays priced for the Michigan State Building Authority (Aa2/AA-/AA/) $282.385 million of 2023 Facilities Program revenue refunding bonds, Series II, with 5s of 10/2023 at 3.18%, 5s of 10/2033 at 2.86%, 5s of 10/2038 at 3.31%, 4s of 10/2043 at 4.06%, and 4s of 10/2047 at 4.11%, callable 10/15/2033.
Siebert Williams Shank & Co. priced for the Bexar County Hospital District, Texas (Aa1//AA+/), $188.125 million of certificates of obligation, Series 2023, with 5s of 2/2025 at 3.11%, 5s of 2028 at 2.85%, 5s of 2033 at 3.00%, 5s of 2038 at 3.44%, 5s of 2043 at 3.77%, 5s of 2048 at 3.90% and 4.25s of 2053 at 4.30%, callable 8/15/2032.
BofA Securities priced for the Regents of the University of Colorado (Aa1//AA+/) $117.800 million of university enterprise refunding revenue bonds, Series 2023A, with 4s of 06/2024 at 3.07%, 4s of 2028 at 2.72%, 4s of 2033 at 2.79%, 5s of 2037 at 3.08%, 4s of 2043 at 3.97% and 4s of 2048 at 4.09%, callable 6/1/2033.
Secondary trading
Wisconsin 5s of 2024 at 3.03% versus 3.05% Friday. North Carolina 5s of 2025 at 2.86%. California 5s of 2026 at 2.69% versus 2.71%-2.72% Monday and 2.72% Friday.
Minnesota 5s of 2028 at 2.55%-2.56% versus 2.58% Friday. Triborough Bridge and Tunnel Authority 5s of 2028 at 2.53% versus 2.77% on 7/7. Maryland 5s of 2030 at 2.52% versus 2.68% Thursday.
Frisco, Texas, 5s of 2032 at 2.66% versus 2.80% original on Thursday. NYC 5s of 2033 at 2.81%-2.82%. Georgia 5s of 2035 at 2.67% versus 2.70%-2.68% Friday and 2.75%-2.74% Thursday.
Palm Beach County, Florida, 5s of 2046 at 3.64%-3.65%. LA DWP 5s of 2052 at 3.63%-3.62% versus 3.73% on 7/12. Massachusetts 5s of 2053 at 3.80%-3.78% versus 3.81% Friday and 3.86%-3.84% Thursday.
AAA scales
Refinitiv MMD's scale was bumped up to four basis points: The one-year was at 2.99% (-2) and 2.86% (-2) in two years. The five-year was at 2.54% (-2), the 10-year at 2.53% (-4) and the 30-year at 3.49% (unch) at 3 p.m.
The ICE AAA yield curve was bumped two to four basis points: 3.00% (-2) in 2024 and 2.90% (-2) in 2025. The five-year was at 2.53% (-2), the 10-year was at 2.52% (-3) and the 30-year was at 3.50% (-4) at 4 p.m.
The IHS Markit municipal curve was bumped up to four basis points: 3.00% (-1) in 2024 and 2.88% (-1) in 2025. The five-year was at 2.54% (-1), the 10-year was at 2.53% (-4) and the 30-year yield was at 3.49% (unch), according to a 3 p.m. read.
Bloomberg BVAL was bumped up three to four basis point: 2.95% (-3) in 2024 and 2.84% (-4) in 2025. The five-year at 2.53% (-4), the 10-year at 2.48% (-4) and the 30-year at 3.47% (-3) at 4 p.m.
Treasuries were mixed.
The two-year UST was yielding 4.764% (+2), the three-year was at 4.352% (+1), the five-year at 4.009% (-1), the 10-year at 3.793% (-2), the 20-year at 4.79% (-2) and the 30-year Treasury was yielding 3.902% (-3) near the close.
Primary to come:
The Trustees of the California State University (Aa2/AA-//) is set to price Wednesday $906.529 million of systemwide revenue bonds, consisting of $343.945 million of tax-exempts, Series 2023A, serials 2024-2043, terms 2048, 2053; $462.575 million of taxables, Series 2023B, serials 2024-2039, term 2053; and $100 million of tax-exempts, Series 2016B-3, term 2051. Barclays.
The Lamar Consolidated Independent School District, Texas (Aaa/AAA//), is set to price Thursday $516.925 million of PSF-insured unlimited tax schoolhouse bonds, Series 2023A. Jefferies.
Salt Lake City (A2/A+//AA) is set to price Wednesday $429.110 million of AMT airport revenue bonds, Series 2023A, serials 2025-2043, terms 2048, 2053, on behalf of Salt Lake City International Airport. BofA Securities.
The Arkansas Development Finance Authority is set to price this week $330 million of Hybar Steel Project industrial development revenue bonds, consisting of $110 million of tax-exempts, Series 2023A, and $220 million taxable, convertible to tax-exempt, green bonds, Series 2023B. Goldman Sachs.
The Maryland Department of Housing and Community Development (Aa1//AA+/) is set to price Wednesday $300 million of social residential million of bonds, consisting of $115 million of tax-exempts Series 2023C, serials 2024-2035, terms 2038, 2043, 2049, 2054; and $185 million of taxables, Series 2023D, serials 2024-2035, terms 2038, 2043, 2047, 2053. RBC Capital Markets.
The San Francisco Public Utilities Commission (Aa2/AA-//) is set to price Wednesday $273.730 million of San Francisco Water revenue refunding bonds, consisting of $263.370 million of Series 2023C and $10.360 million of Series 2023D. Jefferies.
The Board of Regents of Texas Tech University System (Aa1//AA+/AA+/) is set to price Thursday $253.700 million of revenue financing system bonds, consisting of Series 2023A refunding and improvement bonds and Series 2023B taxable improvement bonds. J.P. Morgan Securities.
The Cities of Dallas and Fort Worth, Texas (A1/A+/A+/AA), is set to price Wednesday $230.230 million of taxable joint revenue refunding bonds, Series 2023A, serials 2023-2037, terms 2042, 2047, on behalf of the Dallas Fort Worth International Airport. Loop Capital Markets.
The Southwest Independent School District, Texas, is set to price Wednesday $200 million of PSF-insured unlimited tax school building bonds, Series 2023, serials 2024-2053. Hilltop Securities.
The St. Lucie County School Board, Florida (A1/AA//), is set to price Thursday $185 million of Assured Guaranty Municipal-insured certificates of participation, Series 2023A and 2023B. RBC Capital Markets.
The Rhode Island Housing and Mortgage Finance Corp. (Aa1/AA+//) is set to price Wednesday $160.290 million of homeownership opportunity bonds, consisting of taxable Series 80-T-I and non-AMT social Series 80-A. J.P. Morgan Securities.
The Las Vegas Convention and Visitors Authority (Aa3/AA-//) is set to price Wednesday $150 million of convention center expansion and renovation revenue bonds, consisting of $137.060 million of tax-exempts, serials 2027-2043, term 2049, and $12.940 million of taxables, series 2024-2027. BofA Securities.
Competitive
The New York City Transportation Finance Authority is set to sell $130 million of taxable future tax-secured subordinate bonds, Fiscal 2024A Series A, Subseries A-2, at 11:15 a.m. eastern Wednesday.
Rochester, New York, is set to sell $105.250 million of bond anticipation notes, Series 2023 II, at 11 a.m. Wednesday.
Christina Baker contributed to this story
