Secondary trading keeps triple-A curves steady while new issues reprice to lower yields
5 min read
Municipals were steady for another session as the primary market took focus with several large deals seeing yields lowered upon repricing. U.S. Treasuries were weaker and equities saw losses.
The Investment Company Institute reported $1.329 billion of inflows into municipal bond mutual funds for the week ending Sept. 18 after $1.402 billion of inflows the week prior. Exchange-traded funds saw $55 million of inflows after $1.048 billion of inflows the previous week.
“As we say goodbye to summer, we also say farewell to the very large reinvestment capital of the summer season,” Appleton Partners strategists said in a report.
Through the end of the year, the market will not have that “crutch” as reinvestment drops off, leading to some added volatility around seasonal issuance spikes, they said.
For the past several months issuance has remained robust, with this week boasting nearly $14 billion of supply.
Tuesday was a
That continued Wednesday with several large new-issues pricing and seeing yields fall in repricings.
Issuance year-to-date is at $357.913 billion, up 37.7% from 2023, according to LSEG.
The increase in supply stems, in part, from fear of market volatility following the presidential election, leading issuers to bring deals ahead of Nov. 5, said Jon Mondillo, global head of Fixed Income at abrdn.
Issuers are unwilling to face “that fiscal uncertainty that could come into play depending upon who wins the White House and who wins the Congress,” he noted.
Appleton strategists believe a “combination of increased supply and limited reinvestment demand could elevate yields, providing an opportunity for municipal buyers.”
The 10-year muni-UST ratio is hovering around 70%, and ratios could be pushed higher if supply remains outsized, adding potential value for muni investors, they said.
The two-year muni-to-Treasury ratio Wednesday was at 65%, the three-year at 66%, the five-year at 66%, the 10-year at 70% and the 30-year at 85%, according to Refinitiv Municipal Market Data’s 3 p.m. EST read. ICE Data Services had the two-year at 66%, the three-year at 67%, the five-year at 67%, the 10-year at 71% and the 30-year at 86% at 3:30 p.m.
Muni-UST ratios look rich, especially on the long end, Mondillo said.
“We spent many years where ratios in the long end were north of 100%; they are now hovering in and around 85%-86%,” he said.
This may be the “new normal,” he said.
Yields, Mondillo said, would need to fall in the Treasury market before ratios “get more to historical levels when you go through a period of time of a zero interest rate policy and ultra-low yields in both municipal bonds as well as Treasuries.”
In the primary market Wednesday, BofA Securities priced for institutions $1.061 billion of consolidated bonds from the Port Authority of New York and New Jersey (Aa3/AA-/AA-/), with most maturities bumped from Tuesday’s retail pricing. The first tranche, $602.785 million of non-AMT bonds, Series 245th, saw 5s of 9/2025 at 2.55% (unch), 5s of 2030 at 2.49% (-2), 5s of 2034 at 2.77% (-1), 5s of 2039 at 3.08% (-7), 5s of 2044 at 3.48% (-6), 5s of 2049 at 3.71% (-4) and 5s of 2054 at 3.82% (-5), callable 9/1/2034.
The second tranche, $458.595 million of AMT bonds, Series 246th, saw 5s of 9/2025 at 3.20% (unch), 5s of 2030 at 3.24% (+5), 5s of 2034 at 3.46% (-2), 5s of 2039 at 3.72% (-1) and 5s of 2044 at 3.94% (-5), callable 9/1/2034.
BofA Securities priced and repriced for the Salt River Project Agricultural Improvement and Power District (Aa1/AA+//) $700 million of Salt River Project electric system revenue bonds with yields bumped up to seven basis points from the preliminary pricing. The first tranche, $551.135 million of Series A, saw 5s of 1/2026 at 2.43% (-3), 5s of 2029 at 2.36% (-6), 5s of 2034 at 2.72% (-5), 5s of 2038 at 2.99% (-2), 5s of 2044 at 3.42% (-5), 5s of 2049 at 3.64% (-5), 5s of 2054 at 3.76% (-3) and 5.25s of 2054 at 3.72% (-2), callable 1/1/2035.
The second tranche, $144.865 million of Series B, saw 5s of 5/2029 at 3.06% (-4) and 5s of 2042 at 3.30% (-7), callable 11/1/2034.
Wells Fargo priced for the Cypress-Fairbanks Independent School District, Texas,(Aaa/AAA//) is set to price Wednesday $303.965 million PSF-insured unlimited tax school building bonds, Series 2024B, with 5s of 2/2026 at 2.49%, 5s of 2029 at 2.46%, 5s of 2034 at 2.86%, 5s of 2039 at 3.13%, 4s of 2044 at 3.89% and 4s of 2049 at 4.07%, callable 2/15/2034.
BofA Securities priced for the Charleston County Airport District, South Carolina, (A1/A+//) $289.13 million of airport revenue bonds. The first tranche, $95.31 million of AMT bonds, Series 2024A, saw 5.25s of 7/20141 at 3.86%, 5.25s of 2044 at 3.98%, 5.25s of 2049 at 4.11% and 5.25s of 2054 at 4.15%, callable 7/1/2034.
The second tranche, $193.82 million of non-AMT bonds, Series 2024B, saw 5s of 7/2028 at 2.47%, 5s of 2029 at 2.52%, 5s of 2034 at 2.86%, 5s of 2039 at 3.16%, 5s of 2044 at 3.61%, 5s of 2049 at 3.82% and 5.25s of 2054 at 3.85%, callable 7/1/2034.
Baird priced for Sierra Vista Industrial Development Authority, Arizona, $201.62 million of nonrated American Leadership Academy education facility revenue bonds, Series 2024, with 5s of 6/2034 at 4.33%, 5s of 2044 at 4.84%, 5s of 2054 at 5.02%, 5s of 2059 at 5.07% and 5s of 2064 at 5.12%, callable 6/15/2031.
BOK Financial Securities priced and repriced for the Oklahoma Water Resources Board (/AAA//) $113.605 million of state loan program revenue bonds, Series 2024C, with bumped up to 12 basis points from the preliminary pricing: 5s of 10/2025 at 2.62% (-3), 5s of 2029 at 2.45% (-12), 5s of 2034 at 2.94% (-9), 5s of 2039 at 3.17% (-11), 4s of 2044 at 3.96% (-4), 4s of 2049 at 4.05% (-4) and 4s of 2054 at 4.07% (-8), callable 10/1/2031.
In the competitive market, the Indiana Finance Authority (/AAA/AAA/) sold $225 million of state revolving fund program green bonds to Truist Securities, with 5s of 2/2038 at 2.90%, 5s of 2039 at 3.00%, 5s of 2044 at 3.39% and 5s of 2049 at 3.66%, callable 2/1/2034.
Waltham, Massachusetts, (/AA+//) sold $118.9 million of GO municipal purpose loan of 2024 bonds to Wells Fargo, with 5s of 8/2025 at 2.40%, 5s of 2029 at 2.10%, 4s of 2034 at 2.43%, 4s of 2039 at 3.14%, 3s of 2044 at 3.90%, 4s of 2049 at par and 4s of 2053 at 4.07%, callable 8/15/2033.
AAA scales
Refinitiv MMD’s scale was unchanged: The one-year was at 2.50% and 2.30% in two years. The five-year was at 2.31%, the 10-year at 2.63% and the 30-year at 3.52% at 3 p.m.
The ICE AAA yield curve was little changed: 2.53% (unch) in 2025 and 2.33% (unch) in 2026. The five-year was at 2.33% (+1), the 10-year was at 2.63% (+1) and the 30-year was at 3.51% (unch) at 3:30 p.m.
The S&P Global Market Intelligence municipal curve was little changed: The one-year was at 2.52% (+2) in 2025 and 2.32% (unch) in 2026. The five-year was at 2.32% (unch), the 10-year was at 2.60% (+1) and the 30-year yield was at 3.50% (unch) at 3 p.m.
Bloomberg BVAL was little changed: 2.44% (unch) in 2025 and 2.38% (unch) in 2026. The five-year at 2.37% (unch), the 10-year at 2.61% (unch) and the 30-year at 3.49% (unch) at 3:30 p.m.
Treasuries were weaker.
The two-year UST was yielding 3.561% (+4), the three-year was at 3.495% (+5), the five-year at 3.527% (+5), the 10-year at 3.791% (+5), the 20-year at 4.188% (+6) and the 30-year at 4.143% (+5) at the close.
Primary calendar:
The Texas Water Development Board (/AAA/AAA/) is set to price Thursday $1.258 billion of state water implementation revenue fund master trust revenue bonds, Series 2024A, serials 2025-2037, terms 2038, 2039, 2040, 2041, 2042, 2043, 2044, 2049, 2054, 2059. BofA Securities.
The Missouri Housing Development Commission (/AA+//) is set to price Thursday $142 million of single-family mortgage revenue bonds, consisting of $130 million of Series 2024G, serials 2025-2036, terms 2039, 2044, 2049, 2054, 2055, and $12 million of Series H taxables, terms 2026, 2027, 2028, 2029, 2030, 2031, 2032, 2033, 2034, 2039, 2044, 2049, 2054. Stifel.
Competitive:
Montgomery County, Maryland, (Aaa/AAA/AAA/) is set to sell $280 million of general obligation bonds at 10 a.m. eastern and $456.465 million of GO refunding bonds at 10:15 a.m. Thursday.
