Investors dig into large deals from Houston, LA USD, Energy Northwest
5 min read
The primary market was the focus Tuesday as investors digested several large deals and the secondary took a backseat while U.S. Treasuries improved and equities rallied on earnings reports
This week provides “ample opportunity” to buy paper with up to $13 billion of supply on tap, said Chris Brigati, senior vice president and director of strategic planning and fixed income research at SWBC.
The rise in issuance this week should keep muni yields “elevated,” said Anders S. Persson, Nuveen’s chief investment officer for global fixed income, and Daniel J. Close, Nuveen’s head of municipals.
The large new-issue deals “should be priced to sell, as dealers want to keep deals moving” and they should be “well received, as institutional municipal money managers need large block sizes to retool portfolios toward original mandates,” they said.
Brigati noted that muni-UST ratios “remain on the rich side of the ledger, but this is our new normal.”
The two-year muni-to-Treasury ratio Tuesday was at 64%, the three-year at 63%, the five-year at 60%, the 10-year at % a60nd 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 64%, the three-year at 63%, the five-year at 60%, the 10-year at 61% and the 30-year at 82% at 3:30 p.m.
Since the start of March, front-end yields have endured “very well” while term spreads gap wider, said Matt Fabian, a partner at Municipal Market Analytics.
“Bifurcated demand reflects the persistent bid strength from [separately managed accounts] and retail investors, not to mention more accounts marshaling cash and liquidity up front while the Fed perspective evolves,” he said.
“The strength of SMA demand can also be
The usually institutions-supported back end of the curve has not been “well supported,” he said.
With May approaching and being the worst reinvestment month of the year, Fabian said near-term optimism is even harder to find.
This is outside of the primary market, where well-structured credits will see strong going-away demand, Fabian said.
“With potentially much more tax-exempt product to come, perhaps via
And with the April 15 tax deadline passed, Brigati said “investors can refocus on the market and opportunities as we head toward the summer buying season.”
Quality 5s on the long end “are available with a 4-handle yield,” he said, while “cheaper credit 4% coupons around the 20-year area are priced at a deep enough discount to par to place the market in no-man’s-land for retail buyers at the moment.”
In the primary market Tuesday, BofA Securities held a one-day retail order for the Los Angeles Unified School District’s (Aa2//AAA/AAA/)
Jefferies preliminarily priced and repriced for Houston (Aa2//AA/) $870.150 million of combined utility system first lien revenue refunding bonds, Series 2024A, with 5s of 11/2025 at 3.42% (-3bps), 5s of 2029 at 3.02% (-4), 5s of 2034 at 3.12%, 5s of 2039 at 3.47% (-5), 5s of 2044 at 3.86% (4-), 5.25s of 2049 at 4.07% (-6) and 5.25s of 11/2054 at 4.18% (-5), callable 5/15/2034.
J.P. Morgan Securities priced for Energy Northwest (Aa1/AA-/AA/) $571.075 million of Columbia Generating Station revenue and refunding bonds with 5s of 7/2030 at 2.97%, 5s of 2035 at 3.09%, 5s of 2039 at 3.45% and 5s of 2040 at 3.56%, callable 7/1/2034.
Morgan Stanley held a one-day retail order for Oregon’s (Aa1/AA+/AA+/) $267.125 million of GOs. The first tranche, $195.620 million of 2024 Series A, saw 5s of 5/2025 at 3.44%, 5s of 2029 at 2.88%, 5s of 2034 at 2.93%, 5s of 2039 at 3.37% and 5s of 2044 at 3.79%, callable 5/1/2034.
The second tranche, $71.505 million of 2024 Series D, saw 5s of 6/2025 at 3.41%, 5s of 2029 at 2.88%, 5s of 2034 at 2.93%, 5s of 2039 at 3.37% and 5s of 2044 at 3.79%, callable 6/1/2034.
Jefferies priced for the New Jersey Housing and Mortgage Finance Agency (Aa2/AA//) $205.5 million of non-AMT social single-family housing revenue bonds, Series K, with all bonds priced at par — 3.5s of 4/2025, 3.65s of 4/2029, 3.75s of 10/2029, 4s of 4/2034, 4s of 10/2034, 4.15s of 10/2039, 4.55s of 10/2044 and 4.7s of 10/2050 — except for 6s of 10/2055 at 4.18%, callable 10/1/2032.
In the competitive market, the Florida Department of Transportation (Aa2/AA/AA/) sold $155.680 million of turnpike revenue refunding bonds, Series 2024A, to BofA Securities, with 6s of 7/2025 at 3.40%, 6s of 2029 at 2.95%, 5s of 2034 at 3.01%, 5s of 2039 at 3.39% and 5s of 2040 at 3.50%, callable 7/1/2034.
AAA scales
Refinitiv MMD’s scale was unchanged: The one-year was at 3.38% and 3.15% in two years. The five-year was at 2.78%, the 10-year at 2.74% and the 30-year at 3.90% at 3 p.m.
The ICE AAA yield curve was little changed: 3.41% (unch) in 2025 and 3.19% (-1) in 2026. The five-year was at 2.80% (unch), the 10-year was at 2.78% (unch) and the 30-year was at 3.87% (unch) at 3:30 p.m.
The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 3.41% in 2025 and 3.18% in 2026. The five-year was at 2.79%, the 10-year was at 2.79% and the 30-year yield was at 3.89%, according to a 3 p.m. read.
Bloomberg BVAL was unchanged: 3.41% in 2025 and 3.19% in 2026. The five-year at 2.72%, the 10-year at 2.72% and the 30-year at 3.91% at 3 p.m.
Treasuries were slightly firmer.
The two-year UST was yielding 4.927% (-4), the three-year was at 4.764% (-4), the five-year at 4.627% (-3), the 10-year at 4.607% (-2), the 20-year at 4.852% (flat) and the 30-year at 4.733% (flat) near the close.
Negotiated calendar:
The Florida Development Finance Corp. is set to price
The New Jersey Health Care Facilities Financing Authority is set to price Wednesday $370.32 million of RWJ Barnabas Health Obligated Group revenue and refunding bonds (A1/AA-//). Jefferies.
The Tarrant County Cultural Education Facilities Finance Corp. (A1//A+/) is set to price Wednesday $210.695 million of Christus Health revenue bonds, Series 2024A. RBC Capital Markets.
Valparaiso, Indiana, is set to price Thursday $173.565 million of non-rated Pratt Paper, LLC Project exempt facilities refunding revenue bonds, serials 2034, 2044, 2054. BofA Securities.
The Frisco Independent School District, Texas, (Aaa/AAA//) is set to price Wednesday $148.32 million of PSF-insured unlimited tax school building and refunding bonds. Piper Sandler & Co.
The Maine Municipal Bond Bank (Aa2/AA+//) is set to price Wednesday $135.31 million of series A bonds, serials, 2025-2044, terms, 2049, 2054. BofA Securities.
The Massachusetts Housing Finance Agency (Aa1/AA+//) is set to price Wednesday $124.27 million of single-family housing AMT, non-AMT and taxable social revenue bonds. Raymond James.
The Okaloosa Gas District, Florida, (Aa3///) is set to price Thursday $107.585 million of taxable and tax-exempt gas system revenue bonds. BofA Securities.
Competitive
Denton County, Texas, is set to sell $106.475 million of permanent improvement bonds, Series 2024, at 11 a.m. Wednesday.
