Bonds

Large primary market takes focus

Following a three-day extended rally, municipals reversed course and were mostly weaker five years and out Tuesday in secondary trading as the primary market took focus with several large deals. U.S. Treasuries sold off and equities rallied.

The two-year muni-to-Treasury ratio Tuesday was at 64%, the three-year at 66%, the five-year at 66%, the 10-year at 65% and the 30-year at 82%, 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 68%, the five-year at 68%, the 10-year at 69% and the 30-year at 85% at 3:30 p.m.

“As we head into the back nine of 2024, munis are continuing to have a strong second half of the year as current returns for year are now at 1.96%,” said Jason Wong, vice president of municipals at AmeriVet Securities.

Before the start of the third quarter, munis were seeing losses of 0.40%, but with “the July rally and the first couple of days of August being off to a hot start, muni returns for the month are at 1.45%,” he said.

Before Friday’s weaker-than-expected jobs report, muni yields were down an average of about six basis points on the week, but Friday saw yields fall by roughly nine basis points, Wong said.

Yields fell even further Monday, as muni yields were bumped up to 13 basis points, depending on the scale.

Munis, though, reversed course on Tuesday, as yields rose up to five basis points, depending on the scale, outside of five years.

Despite a setback Tuesday, “with the recent economic numbers indicating that we should expect that the Fed will reduce rates in September due to the weak jobs data on Friday, we should continue to see munis push further into positive territory,” Wong said.

This week’s new-issue calendar will be “outsized,” said Anders S. Persson, Nuveen’s chief investment officer for global fixed-income, and Daniel J. Close, Nuveen’s head of municipals.

Tuesday was a particularly busy day, led by the pricing of the Louisiana Public Facilities Authority’s $1.3 billion of P3 senior lien revenue bonds, the Long Island Power Authority’s $1 billion of electric system revenue bonds and the Florida Development Finance Corp.’s $985 million of Brightline Florida passenger rail expansion project revenue bonds in the negotiated market, and the sale of $1.6 million of GOs from Minnesota in six series in the competitive market.

Given the “strong market tone” at the end of last week, AllianceBernstein strategists expect this supply to be “well absorbed.”

However, Persson and Close noted “it will be a struggle to get such large volume placed without deeply discounting some deals.”

“Some deals will likely end up being pulled, and many will be priced at steep concessions to pique buyers’ interest,” they said.

In the primary market Tuesday, J.P. Morgan priced for the Louisiana Public Facilities Authority (Baa3///) $1.322 billion of AMT I-10 Calcasieu River Bridge P3 senior lien revenue bonds, Series 2024, with 5.5s of 9/2054 at 4.50%, 5.5s of 2059 at 4.65%, 5.75s of 2064 at 4.70% and 5s of 2066 at 4.90%, callable 9/1/2034.

BofA Securities priced and repriced for the Long Island Power Authority (A2/A/A+/) $1.003 billion of electric system general revenue bonds, with yields bumped up to 12 basis points from Tuesday’s preliminary pricing. The first tranche, $718.155 million of Series 2024A, saw 5s of 9/2025 at 2.61% (-10), 5s of 2029 at 2.60% (-12), 5s of 2034 at 2.81% (-3), 5s of 2039 at 3.03% (-2), 4s of 2039 at 3.23% (-2), 5s of 2044 at 3.47% (-2), 5s of 2049 at 3.68% (unch), 5s of 2054 at 3.78% (-1) and 5.25s of 2054 at 3.72% (-2), callable 9/1/2034.

The second tranche, $285.195 million of fixed-rate mandatory tender bonds, Series 2024B, with 3s of 9/2049 with a put/tender date of 9/1/2029 at 3.20% and 3.3s of 2049 with a put/tender date of 9/1/2031 at 3.25%.

Morgan Stanley priced for the Florida Development Finance Corp. $985 million of non-rated Brightline Florida Passenger Rail Expansion revenue bonds, Series 2024A, with 8.25s of 7/2057 with a mandatory put date of 2/14/2025 price at par.

BofA Securities held a one-day retail order for $646.84 million of tax-exempt systemwide revenue bonds for the Trustees of California State University (Aa2/AA-//), with 5s of 11/2025 at 2.47%, 5s of 2029 at 2.40%, 5s of 2034 at 2.54%, 5s of 2039 at 2.85%, 5s of 2044 at 3.22%, 5s of 2049 at 3.45%, 5s of 2055 at 3.55% and 5.25s of 2055 at 3.50%, callable 11/1/2034.

BofA Securities priced for the California Statewide Communities Development Authority (/A+/A/) $393.215 million of fixed-mode John Muir Health revenue bonds, Series 2024A, with 5s of 12/2025 at 2.76%, 5s of 2029 at 2.70%, 5s of 2034 at 2.95%, 5s of 2039 at 3.22%, 5.25s of 2044 at 3.55%, 5s of 2049 at 3.87% and 5.25s of 2054 at 3.89%, callable 12/1/2034.

Siebert Williams Shank priced for Atlanta (Aa3//AA-/AA+/) $367.4 million of airport general revenue bonds. The first tranche, $228.09 million of non-AMT green bonds, Series 2024A-1, saw 5s of 7/2025 at 2.63%, 5s of 2029 at 2.57%, 5s of 2034 at 2.76%, 5s of 2039 at 3.04%, 5s of 2044 at 3.44%, 5s of 2049 at 3.72% and 5s of 2054 at 3.83%, callable 7/1/2034.

The second tranche, $23.07 million of non-AMT bonds, Series 2024A-2, saw aw 5s of 7/2025 at 2.64%, 5s of 2029 at 2.59% and 5s of 2034 at 2.78%, noncall.

The third tranche, $116.24 million of AMT bonds, Series 2024B, saw 5s of 7/2034 at 3.42%, 5s of 2039 at 3.71%, 5.25s of 2044 at 34.09%, 5.25s of 2049 at 4.09% and 5.25s of 2054 at 4.15%, callable 7/1/2034.

Jefferies priced for the University of Colorado Hospital Authority (Aa2/AA/AA/) $261.925 million of revenue and revenue refunding bonds. The first tranche, $111.9 million of Series 2024A, saw 5s of 11/2029 at 2.79%, noncall.

The second tranche, $150.025 million of Series 2024B, saw 5s of 11/2025 at 2.74%, 5s of 2029 at 2.79%, 5s of 2035 at 2.98% and 5s of 2039 at 3.19%, callable 11/15/2034.

Jefferies priced for Alaska (Aa3/AA//AA/) $191.84 million of GO refunding bonds. The first tranche, $83.57 million of Series 2024B, saw 5s of 8/2026 at 2.66%, 5s of 2029 at 2.64%, 5s of 2034 at 2.81% and 5s of 2035 at 2.87%, callable 8/1/2034.

The second tranche, $108.27 million of forward-delivery bonds, Series 2025A, saw 5s of 8/2026 at 3.09%, 5s of 2029 at 3.09%, 5s of 2034 at 3.21% and 5s of 2035 at 3.25%, noncall.

Loop Capital Markets priced for Cook County, Illinois, (/AA-/AA/AAA) $164.95 of sales tax revenue refunding bonds, Series 2024, with 5s of 11/2024 at 3.14%, 5s of 2029 at 2.73%, 5s of 2034 at 2.93%, 5s of 2039 at 3.25% and 5s of 2044 at 3.58%, callable 11/15/2032.

BofA Securities priced for the Okaloosa School Board, Florida, (Aa3/AA/AA/) $156.72 million of Assured Guaranty-insured certificates of participation, Series 2024, with 5s of 10/2025 at 2.75%, 5s of 2029 at 2.70%, 5s of 2034 at 2.86%, 5s of 2039 at 3.18%, 5s of 2044 at 3.57% and 5s of 2049 at 3.83%, callable 10/1/2034.

BofA Securities priced for the South Carolina State Housing Finance and Development Authority (Aaa///) $150 million of non-AMT mortgage revenue bonds, Series 2024 B, with 5s of 7/2025 at 2.83%, 5s of 1/2029 at 3.04%, 5s if 7/2029 at 3.07%, 3.75s of 1/2034 at par, 3.75s of 7/2034 at par, 4s of 7/2039 at 3.98%, 4/275s of 7/2044 at par, 4.6s of 7/2049 at 4.57%, 4.625s of 7/2054 at par and 6s of 1/2055 at 3.75%, callable 7/1/2033.

Goldman Sachs priced for the Anaheim Housing and Public Improvements Authority (/AA-/AA-/) $109.515 million of electric utility distribution system revenue refunding bonds, Series 2024-A, with 5s of 10/2025 at 2.50%, 5s of 2029 at 2.40%, 5s of 2034 at 2.61% and 5s of 2039 at 2.88%, callable 4/1/2030.

In the competitive market, Minnesota (Aaa/AAA/AAA/) sold $449.25 million of GO state various purpose bonds, Series 2024A, Bidding Group 1, to BofA Securities, with 5s of 8/2025 at 2.60%, 5s of 2029 at 2.52% and 5s of 2034 at 2.69%, noncall.

The state also sold $444.725 million of GO state various purpose bonds, Series 2024A, Bidding Group 2, to J.P. Morgan, with 5s of 8/2035 at 2.72%, 5s of 2039 at 2.91% and 5s of 2044 at 3.22%, callable 8/1/2034.

Minnesota sold $352.75 million of GO state trunk highway bonds, Series 2024B, to RBC Capital Markets, with 5s of 8/2025 at 2.60%, 5s of 2029 at 2.52%, 5s of 2034 at 2.69%, 4s of 2039 at 3.23% and 4s of 2044 at 3.62%, callable 8/1/2034.

The state sold $30.965 million of taxable GO state various purpose bonds, Series 2024C, to Piper Sandler. Details were unavailable at press time.

Minnesota sold $192.715 million of GO state various purpose refunding bonds, Series 2024D, to J.P. Morgan, with 5s of 8/2025 at 2.63%, 5s of 2029 at 2.52% and 5s of 2034 at 2.67%, noncall.

The state sold $141.225 million of GO state truck highway refunding bonds, Series 2024E, to BofA Securities, with 5s of 8/2025 at 2.60%, 5s of 2029 at 2.52% and 5s of 2034 at 2.69%, noncall.

The Louisville and Jefferson County Metropolitan Sewer District, Kentucky, (Aa3/AA//) sold $105.61 million of sewer and drainage system revenue bonds, Series 2024A, to Wells Fargo, with 5s of 5/2025 at 2.70%, 5s of 2029 at 2.63%, 5s of 2034 at 2.72% and 5s of 2039 at 3.06%, callable 11/15/2034.

AAA scales
Refinitiv MMD’s scale was cut up to three basis points: The one-year was at 2.58% (unch) and 2.56% (unch) in two years. The five-year was at 2.47% (unch), the 10-year at 2.54% (+2) and the 30-year at 3.43% (+3) at 3 p.m.

The ICE AAA yield curve was mixed: 2.69% (-3) in 2025 and 2.62% (-3) in 2026. The five-year was at 2.47% (-2), the 10-year was at 2.57% (+2) and the 30-year was at 3.45% (+1) at 3:30 p.m.

The S&P Global Market Intelligence municipal curve was cut up to three basis points: The one-year was at 2.61% (unch) in 2025 and 2.59% (unch) in 2026. The five-year was at 2.46% (unch), the 10-year was at 2.54% (+3) and the 30-year yield was at 3.41% (+3) at 3 p.m.

Bloomberg BVAL was cut one to five basis points: 2.63% (+1) in 2025 and 2.59% (+1) in 2026. The five-year at 2.51% (+3), the 10-year at 2.53% (+4) and the 30-year at 3.44% (+4) at 3:30 p.m.

Treasuries sold off.

The two-year UST was yielding 3.987% (+11), the three-year was at 3.817% (+11), the five-year at 3.730% (+12), the 10-year at 3.889% (+12), the 20-year at 4.124% (+12) and the 30-year at 4.125% (+13) at 3:45 p.m.

Primary to come
Chicago (/BBB+/A-/A) is set to price Wednesday $643.11 million of GOs, Series 2024A, serials 2041-2045. Huntington Securities.

The Hillsborough County Aviation Authority (Aa3//AA-/AA/) is set to price Thursday $483.875 million of AMT Tampa International Airport revenue bonds, 2024 Series B, serials 2027-2044, terms 2049, 2054. J.P. Morgan.

Colorado Springs, Colorado, (Aa2/AA+//) is set to price Wednesday $385.2 million of utilities system revenue bonds, consisting of $294.865 million of improvement bonds, Series 2024A, serials 2030-2044, terms 2049, 2054; and $90.335 million of refunding bonds, Series 2024B, serials 2024-2028, 2030-2044. BofA Securities.

The Los Angeles Department of Water and Power (Aa2/AA-//AA) is set to price Thursday $355.3 million of power system revenue bonds, 2024 Series D, serials 2029-2032, 2036, 2038, 2041, 2043, 2045, 2047, 2050, 2052, 2054. Barclays.

The Chattanooga Health, Educational and Housing Facility Board (/A/A-/) is set to price Thursday $322.565 million of Erlanger Health health system revenue bonds, Series 2024. Morgan Stanley.

The Crowley Independent School District, Texas, (Aaa//AAA/) is set to price Wednesday $242.36 million of PSF-insured unlimited tax school building bonds, Series 2024, serials 2025, 2027-2054. Siebert Williams Shank.

The Los Angeles County Facilities Inc. (/AA+/AA+/) is set to price Wednesday $220.745 million of Vermont Corridor Site 2 lease revenue bonds, consisting of $215.23 million of tax-exempts, Series 2024A, serials 2029-2045, term 2049, 2054, 2057, and $5.545 million of taxables, Series 2024B, serials 2028-2029. Barclays.

The National Finance Authority, New Hampshire, is set to price Thursday $176.66 million of Tamarron Project special revenue bonds, Series 2024, serial 2035. Wells Fargo.

The Nebraska Investment Finance Authority (/AAA//) is set to price Wednesday $174.085 million of social non-AMT single-family housing revenue bonds 2024 Series E, serials 2025, 2030-2036, terms 2039, 2044, 2049, 2049, 2054. J.P. Morgan.

The Colorado Housing and Finance Authority (Aaa/AAA//) is set to price Wednesday $150.355 million of taxable single-family mortgage bonds, Class I, 2024 Series E-1, serials 2026-2036, terms 2039, 2043, 2049. RBC Capital Markets.

The Pecos-Barstow-Toyah Independent School District, Texas, (/AAA//) is set to price Thursday $144.28 million of PSF-insured unlimited tax school building bonds, Series 2024, serials 2025-2043. Frost Bank.

The New Braunfels Independent School District, Texas, is set to price Thursday $125 million of unlimited tax school building bonds, Series 2024. Piper Sandler.

The Massachusetts Development Finance Agency (Aa1/AA+/) is set to price Thursday $108 million of Williams College issue revenue bonds, Series 2024V. Goldman Sachs.

The Development Authority of Burke County, Georgia, (Baa1/A/A-/) is set to price Wednesday $100 million of Georgia Power Company Plant Vogtle Project pollution control revenue bonds, Second Series 2012. Goldman Sachs.

Competitive
Oyster Bay, New York, is set to sell $185.24 million of bond anticipation notes, at 10:30 a.m. Eastern Thursday.

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