Mu­nis End Stronger Ahead of $3.9B New-Is­sue Cal­en­dar

The Bond Buyer - - Market News -

Top-rated mu­nic­i­pal bonds fin­ished stronger on Tues­day, ac­cord­ing to traders who re­turned to their desks to get ready for a lighter-than-av­er­age hol­i­day week new-is­sue cal­en­dar.

Vol­ume for the week is es­ti­mated at $3.86 bil­lion, con­sist­ing of $3.03 bil­lion of ne­go­ti­ated deals and $828.2 mil­lion of com­pet­i­tive sales.

Bad news and bad weather com­bined to cause a flight-to-qual­ity bid in bonds on Tues­day as in­vestors fret­ted about the po­ten­tially deadly sit­u­a­tions in North Korea and the Caribbean with Py­ongyang boast­ing of its nu­clear reach and Puerto Rico pre­par­ing for the ef­fects of Hur­ri­cane Irma.

The yield on the 10-year bench­mark muni gen­eral obli­ga­tion fell three ba­sis points to 1.85% from 1.88% on Fri­day, while the 30-year GO yield de­creased three ba­sis points to 2.68% from 2.71%, ac­cord­ing to the fi­nal read of Mu­nic­i­pal Mar­ket Data’s triple-A scale.

U.S. Trea­suries were stronger on Tues­day. The yield on the twoyear Trea­sury de­clined to 1.29% from 1.34% on

Fri­day, the 10year Trea­sury yield dropped to 2.07% from

2.16% and the yield on the 30-year Trea­sury bond de­creased to 2.69% from 2.77%.

The 10-year muni-to-Trea­sury ra­tio was cal­cu­lated at 89.2% on Tues­day, com­pared with 87.2% on Fri­day, while the 30-year muni-to-Trea­sury ra­tio stood at 99.6% ver­sus 97.9%, ac­cord­ing to MMD.

The Mu­nic­i­pal Se­cu­ri­ties Rule­mak­ing Board re­ported 21,653 trades on Fri­day on vol­ume of $6.69 bil­lion.

Rev­enue bonds com­prised 55.92% of new is­suance in the week ended Sept. 1, up from 55.53% in the pre­vi­ous week, ac­cord­ing to Markit. Gen­eral obli­ga­tion bonds made up 37.06% of to­tal is­suance, down from 37.43%, while tax­able bonds ac­counted for 7.02%, down from 7.04%.

Some of the most ac­tively traded bonds by type were from Cal­i­for­nia, Texas and Illi­nois is­suers.

In the GO bond sec­tor, the Cal­i­for­nia 4s of 2047 were traded 173 times. In the rev­enue bond sec­tor, the Texas 4s of 2018 were traded 67 times. And in the tax­able bond sec­tor, the Chicago Board of Education 6.138s of 2039 were traded 26 times.

The top mu­nic­i­pal bond un­der­writ­ers of last week in­cluded Bank of Amer­ica Mer­rill Lynch, Cit­i­group, Gold­man Sachs, JPMor­gan Se­cu­ri­ties and RBC Cap­i­tal Mar­kets, ac­cord­ing to Thom­son Reuters data.

In the week of Aug. 27 to Sept. 2, BAML un­der­wrote $8.09 bil­lion, Citi $3.49 bil­lion, Gold­man $3.15 bil­lion, JPMor­gan $2.84 bil­lion, and RBC $2.36 bil­lion.

In the short-term com­pet­i­tive sec­tor on Tues­day, the At­lanta In­de­pen­dent School Sys­tem, Ga., sold $100 mil­lion of Se­ries 2017 tax an­tic­i­pa­tion notes. TD Se­cu­ri­ties won the is­sue with a bid of 1.50% and a pre­mium of $133,500, an ef­fec­tive rate of 1.067%. The TANs, dated Sept. 8 and due Dec. 29, are not rated.

On Wed­nes­day, Bank of Amer­ica Mer­rill Lynch is ex­pected to price the city and county of Honolulu’s $350 mil­lion of Se­ries 2017H gen­eral obli­ga­tion float­ing-rate bonds for the Honolulu rail tran­sit project. The deal is rated Aa1 by Moody’s In­vestors Ser­vice and AA-plus by Fitch Rat­ings.

In the com­pet­i­tive arena Thurs­day, Mor­gan Stan­ley is ex­pected to price the week’s largest deal — the New Jersey Eco­nomic De­vel­op­ment Au­thor­ity’s $595 mil­lion of mo­tor ve­hi­cle sur­charges sub­or­di­nate rev­enue and tax­able bonds. The deal is rated Baa2 by Moody’s, but some of the bonds are ex­pected to be in­sured by Build Amer­ica Mu­tual.

Also on Thurs­day, Gold­man Sachs is on the docket to price the Re­gents of the Univer­sity of Texas’ $350 mil­lion of tax­able sys­tem rev­enue bonds on Thurs­day fol­low­ing in­di­ca­tions of in­ter­est on Wed­nes­day. The deal is rated triple-A by Moody’s, S&P Global Rat­ings, and Fitch, and it is an­tic­i­pated to come as a bul­let ma­tu­rity in 2047.

By Chip Bar­nett & aaron Weitzman

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