Bonds

Munis stay put ahead of smaller slate, ignoring UST weakness

Munis were little changed to a touch weaker Monday on the heels of last week’s market correction, mostly ignoring U.S. Treasury market moves to higher yields, while equities were mixed late in the session.

Munis sold off last week “as the anticipated market correction may have finally started ahead of the summer reinvestment period,” said Jason Wong, vice president of municipals at AmeriVet Securities.

Over the past week, muni yields have risen the most on the front end and the belly of the curve, with the former seeing yields rise an average of around 18 basis points and latter seeing yields rise around 21 basis points, he said, while the long end has only seen yields rise around six basis points.

With rising yields, the 10-year MMD yield rose to a high of 2024 that topped 3%, which was last seen in November, Wong said.

Muni underperformance versus USTs has allowed muni-UST ratios to rise, said Pat Luby, head of municipal strategy at CreditSights.

The two-year muni-to-Treasury ratio Monday was at 66%, the three-year at 66%, the five-year at 66%, the 10-year at 66% 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 67%, the three-year at 67%, the five-year at 68%, the 10-year at 68% and the 30-year at 85% at 3:30 p.m.

“Because of the brutal underperformance of the belly, the 10-year M/T ratio jumped to 67% (the cheapest since November 2023),” he said.

The cheapening relative to UST in that part of the curve may “make it easier for dealers to step up and position new-issue intermediate bonds this week if they have more confidence in being able to use Treasuries to hedge their duration risk,” Luby said.

Although the “strong” muni selloff helped ratios rise, they are still rich compared to historical averages, Wong said.

The influx of issuance ahead of the November election is one of the primary drivers of the selloff, he said.

Issuance falls to $5.3 billion this week, led by the Massachusetts Educational Financing Authority with $474 million of education loan revenue bonds.

Supply, though, is expected to rebound in the coming weeks, as several large deals are set to price, according to CreditSights. Bond Buyer 30-day visible supply sits at $14.23 billion.

The San Antonio Electric and Gas Systems, Texas, is set to price next week $1.05 billion of revenue refunding bonds.

The Metropolitan Washington Airports Authority is set to price June 5 $829 million of airport system revenue and refunding bonds.

The Bay Area Toll Authority is set to price next week $719 million of San Francisco Bay Area Toll Bridge revenue bonds.

The New York Transportation Development Corp. is set to price the week of June 17 $1.5 billion of JFK New Terminal One refunding revenue bonds.

Also on the horizon is the Massachusetts Bay Area Transportation Authority, with around $1.2 billion of new-money and refunding sales tax revenue bonds.
 
AAA scales
Refinitiv MMD’s scale was unchanged: The one-year was at 3.36% and 3.30% in two years. The five-year was at 3.03%, the 10-year at 3.01% and the 30-year at 3.87% at 3 p.m.

The ICE AAA yield curve was cut up to two basis points: 3.35% (unch) in 2025 and 3.29% (unch) in 2026. The five-year was at 3.06% (+1), the 10-year was at 3.04% (+2) and the 30-year was at 3.87% (+1) at 3:30 p.m.

The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 3.38% in 2025 and 3.28% in 2026. The five-year was at 3.01%, the 10-year was at 2.97% and the 30-year yield was at 3.85%, according to a 3 p.m. read.

Bloomberg BVAL was cut one to two basis points: 3.40% (+1) in 2025 and 3.27% (+1) in 2026. The five-year at 3.01% (+2), the 10-year at 3.00% (+2) and the 30-year at 3.82% (+1) at 3:30 p.m.

Treasuries were weaker.

The two-year UST was yielding 4.971% (+2), the three-year was at 4.752% (+3), the five-year at 4.582% (+5), the 10-year at 4.539% (+7), the 20-year at 4.744% (+8) and the 30-year at 4.654% (+8) at 3:30 p.m.

Negotiated calendar
The Massachusetts Educational Financing Authority is set to price Thursday $473.985 million of education loan revenue bonds, Issue N, Series 2024, consisting of $369.4 million of taxables (/AA//), Senior Series 2024A, serial 2049, term 2033; $53.79 million of AMT bonds (/AA//), Senior Series 2024B, serials 2028-2030, 2032; $10 million of AMT bonds (/A//), Senior Subordinate Series 2024C, term 2032; and $40.795 million of AMT bonds (/BBB//), Subordinate Series 2024D, serial 2054. RBC Capital Markets.

The University of Cincinnati (Aa3/AA-//) is set to price Wednesday $374.01 million of general receipts bonds, Series 2024, consisting of: $173.265 million of new-issue bonds, Series 2024A, serials 2041-2044, terms 2049, 2054; $60.185 million of taxables, Series 2024B, serials 2035-2041; $100.375 million of refunding bonds, Series 2024C, serials 2025-2044, term 2049; and $40.185 million of refunding forward-delivery bonds, Series 2024D, serials 2025-2041. RBC Capital Markets.

St. Louis (A1/AA/NR/) is set to price Wednesday $286.645 million of Assured Guaranty-insured St. Louis Lambert International Airport revenue bonds, consisting of $278.805 million of Series 2024A and $7.84 million of Series 2024B. Goldman Sachs.

The San Francisco Community College District (/AA//) is set to price Wednesday $270 million of BAM-insured Election of 2020 GOs, Series B. Morgan Stanley.

Miami (Aa2/AA//) is set to price Wednesday $251.16 million of Miami Forever Infrastructure Programs limited ad valorem tax bonds, consisting of $207.105 million of tax-exempts, Series 2024A, serials 2034-2044, terms 2049, 2054, and $44.055 million of taxables, Series 2024B, serials 2025-2034. Siebert Williams Shank.

The Fort Bend Independent School District, Texas, (/AAA/AAA/) is set to price Thursday $200 million of PSF-insured variable rate unlimited tax school building and refunding bonds, Series 2024B. Raymond James.

The Homewood Educational Building Authority, Alabama, (Baa2///) is set to price Thursday $188.8 million of CHF – Horizons II Student Housing and Parking Project at Samford University revenue bonds, consisting of $122.195 million of tax-exempts, Series C, serials 2043-2044, terms 2049, 2054, 2056, and $66.605 million of taxables, Series D, serials 2027-2039, term 2043. RBC Capital Markets.

The Irvine Ranch Water District, California, (/AAA/AAA/) is set to price Thursday $166.61 million of refunding bonds, Series 2024A. Goldman Sachs.

The Duncanville Independent School District, Texas, (Aaa/AAA//) is set to price Wednesday $164.55 million of PSF-insured unlimited tax school building bonds, Series 2024, serials 2027-2044, terms 2049, 2054. Siebert Williams Shank.

The Knox County Health, Educational and Housing Facility Board (/AA//) is set to price Wednesday $136.265 million of BAM-insured Provident Group, UTK Properties, University of Tennessee Project student housing revenue bonds, consisting of $131.73 million of tax-exempts, Series 2024B-1, serials 2031-2039, terms 2044, 2049, 2054, 2059, 2064; $1.13 million of taxables, Series B-2, term 2031; and $3.405 million of tax-exempt subordinate bonds, Series 2024C, serial 2064. RBC Capital Markets.

The Connecticut Housing Finance Authority (Aaa/AAA//) is set to price Wednesday $122.915 million of sustainability Housing Mortgage Finance Program bonds, 2024 Series D, consisting of $57.625 million of Subseries D-1 and $65.29 million of Series D-2. Morgan Stanley.

The Colorado Springs School District 11 is set to price Thursday $120 million of certificates of participation, Series 2024, serials 2024-2043, term 2048. RBC Capital Markets.

Greensboro, North Carolina, (Aa1/AAA//) is set to price Thursday $116.325 million of combined enterprise system revenue bonds, consisting of $21.155 million of taxables, Series 2024A, serials 2025-2036, and $91.17 million of tax-exempts, Series 2024B, serials 2036-2044, term 2049, 2054. BofA Securities.

The Utah Board of Higher Education (Aa1/AA+//) is set to price Thursday $108.765 million of University of Utah general revenue bonds, consisting of $92.995 million of tax-exempts, Series 2024A-1; $10 million of tax-exempts, Series 2024A-2; and $5.77 million of taxables, Series 2024B. Morgan Stanley.

Tempe, Arizona, (/AAA//) is set to price Wednesday $107.16 million of GO and GO refunding bonds, Series 2024, serials 2025-2044. RBC Capital Markets.

The Oklahoma Water Resources Board (/AAA//) is set to price Wednesday $102.405 million of State Loan Program revenue bonds, Series 2024B, serials 2024-2039, terms 2044, 2050, 2054. BOK Financial Securities.

Competitive
Nassau County, New York, (Aa2/AA-/AA/) is set to sell $242.475 million of general improvement bonds, 2024 Series A, at 10 a.m. Wednesday.

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