Munis sell off, upsized $2B JFK deal

Municipals extended their selloff with the largest losses on the short end amid another busy day in the primary market, led by an upsized JFK Airport Terminal 6 Redevelopment Project deal. U.S. Treasuries were little changed and equities ended mixed.

Triple-A yields rose three to 12 basis points, playing some catch up after recent outperformance.

The two-year muni-to-Treasury ratio Tuesday was at 62%, the three-year at 61%, the five-year at 62%, the 10-year at 68% 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 64%, the three-year at 64%, the five-year at 64%, the 10-year at 69% and the 30-year at 83% at 3:15 p.m.

“The route to market stability is newly a work in progress: despite a huge new-issue calendar, aggregate demand has been steady, but this via improving fund inflows and maybe despite a drop in attention for muni [separately managed accounts] while equities are swept up in a massive rally,” said Matt Fabian, a partner at Municipal Market Analytics.

In other words, “the identity of the marginal buyer may be shifting, and with that the market’s valuation of structure and liquidity,” he said.

With 10 trading days before the election and the MMA Municipal Price Index in negative territory since Oct. 4, Fabian said, “all accounts should be testing portfolios for both price and liquidity discovery” if volatility starts on Nov. 6.

However, “investors should still assume that, underneath what has been a smoothly running market, some bias to weakness may be developing that, if given supportive headlines or sympathetic action from taxables, could temporarily unglue bids from asks,” Fabian said.

This week, supply is robust once more at nearly $12 billion, and with “another week of outsized new issuance will need to be priced cheaply to pique buyers’ interests,” said Anders S. Persson, Nuveen’s chief investment officer for global fixed income, and Daniel J. Close, Nuveen’s head of municipals.

However, in spite of “extreme pressure” from outsized volume, the muni market has remained resilient due to the stability of the Treasury market, as munis typically follow the market closely, and the good reception of the supply, which appears to be slowing down, Persson and Close said.

Most issuers will pull back after this week as they await election results, they said.

Persson and Close believe “outsized money” will return to the market in November and December through reinvestment dollars.

In the primary market Tuesday, Goldman Sachs priced for the New York Transportation Development Corp. an upsized $1.939 billion of JFK Airport Terminal 6 Redevelopment Project AMT senior special facilities revenue bonds. The first tranche, $1.839 million of green current interest bonds, Series 2024A (Baa3/BBB-//), saw 5.5s of 12/2054 at 4.70% (uninsured), 4.5s of 2054 at 4.72% (Assured Guaranty-insured), 5.25s of 2054 at 4.64% (Assured Guaranty-insured) and 5.5s of 2060 at 4.83% (uninsured), callable 12/31/2034.

The second tranche was $99.998 million of Assured Guaranty-insured convertible capital appreciation bonds, Series 2024B (A1/AA//AA+/).

Siebert Williams Shank held a one-day retail order for $1.5 billion of future tax-secured subordinate bonds, Fiscal 2025 Series D, from the New York City Transitional Finance Authority (Aa1/AAA/AAA/), with 5s of 2026 at 2.76%, 5s of 2029 at 2.71%, 5s of 2034 at 3.18%, 5s of 2039 at 3.49%, 5s of 2044 at 3.88% and 4.25s of 2054 at 4.40%.

Siebert Williams Shank priced for the New York Metropolitan Transportation Authority (A3/A-/AA/AA/) $478.22 million of climate-certified transportation revenue refunding green bonds, with 5s of 2030 at 2.99%, 5s of 2034 at 3.43%, 5s of 2039 at 3.76% and 4s of 2044 at 4.25%, callable 11/15/2034.

​​J.P. Morgan priced for Springfield, Illinois, (A3/AA//) $372.535 million of BAM-insured senior lien electric revenue refunding bonds, with 5s of 3/2025 at 3.51%, 5s of 2029 at 2.94%, 5s of 2034 at 3.37%, 5s of 2039 at 3.72% and 5s of 2040 at 3.80%, callable 3/1/2034. 

Raymond James priced for the Tomball Independent School District, Texas, (Aaa/AAA//) $183.635 million of PSF-insured unlimited tax building and refunding bonds, with 5s of 2/2026 at 2.91%, 5s of 2029 at 2.81%, 5s of 2034 at 3.17%, 5s of 2039 at 3.46%, 4s of 2044 at 4.05% and 4s of 2050 at 4.21%, callable 2/15/2034.

BofA Securities priced for the Idaho Housing and Finance Association (Aa1///) $175 million of taxable single-family mortgage bonds, 2024 Series C, with all bonds at par – 4.512s of 7/2025, 4.421s of 1/2029, 4.471s of 7/2029, 5.128s of 1/2034, 5/178s of 7/2034, 5.428s of 7/2039, 5.825s of 7/204, 5.895s of 7/2049 and 5.945s of 7/2055 – except for 6.5s of 1/2065 at 5.32%, callable 7/1/2032.

Barclays priced for Spokane County, Washington, (A2/A//) $129.145 million of airport revenue bonds. The first tranche, $34.28 million of non-AMT bonds, Series 2024A, saw 5s of 1/2026 at 3.07%, 5s of 2029 at 2.95%, 5s of 2034 at 3.31%, 5s of 2039 at 3.63%, 5s of 2044 at 4.00%, 5s of 2049 at 4.19% and 5.25s of 2054 at 4.24%, callable 1/1/2034.

The second tranche, $94.865 million of AMT bonds, Series 2024B, saw 5s of 1/2026 at 3.60%, 5s of 2029 at 3.47%, 5s of 2034 at 3.91%, 5.25s of 2039 at 4.14%, 5.25s of 2044 at 4.37%, 5.25s of 2049 at 4.48% and 5.25s of 2054 at 4.58%, callable 1/1/2034.

BofA Securities priced for the South Carolina Jobs-Economic Development Authority (/BB//) $117.235 million of Beaufort Medical Hospital & South of Broad Healthcare Project healthcare revenue bonds, with 5s of 11/2027 at 3.80%, 5s of 2029 at 3.95%, 5s of 2034 at 4.41%, 5.25s of 2039 at 4.55%, 5.5s of 2044 at 4.85% and 5.75s of 2054 at 5.10%, callable 11/15/2034.

In the competitive market, the Highland Park Independent School District, Texas, (Aaa//AAA/) sold $111.865 million of unlimited tax refunding bonds to Wells Fargo, with 5s of 2/2025 at 3.40%, 5s of 2029 at 2.75%, 5s of 2033 at 3.11% and 5s of 2036 at 3.29%, callable 2/15/2034.

The Virginia Housing Development Authority (Aa1/AA-//) sold $106 million of taxable rental housing bonds, 2024 Series F, to BofA Securities, with all bonds at par: 4.26s of 10/2027, 4.36s of 4/2029, 4.42s of 10/2029, 5.1s of 4/2034, 5.15s of 10/2034, 5.4s of 10/2039, 5.75s of 10/2044, 5.85s of 10/2054, 5.9s of 10/2060 and 5.95s of 10/2066, callable 10/1/2033. 

AAA scales
Refinitiv MMD’s scale was cut seven to 12 basis points: The one-year was at 2.88% (+12) and 2.57% (+7) in two years. The five-year was at 2.56% (+7), the 10-year at 2.92% (+8) and the 30-year at 3.79% (+7) at 3 p.m.

The ICE AAA yield curve was cut five to eight basis points in spots: 2.86% (+8) in 2025 and 2.60% (+5) in 2026. The five-year was at 2.56% (+5), the 10-year was at 2.89% (+6) and the 30-year was at 3.71% (+6) at 3:15 p.m.

The S&P Global Market Intelligence municipal curve was cut seven to 10 basis points: The one-year was at 2.88% (+10) in 2025 and 2.62% (+7) in 2026. The five-year was at 2.57% (+7), the 10-year was at 2.89% (+9) and the 30-year yield was at 3.74% (+7) at 3 p.m.

Bloomberg BVAL was cut three to 10 basis points: 2.80% (+3) in 2025 and 2.55% (+3) in 2026. The five-year at 2.53% (+3), the 10-year at 2.85% (+8) and the 30-year at 3.75% (+10) at 3:15 p.m. 

Treasuries were little changed.

The two-year UST was yielding 4.033% (flat), the three-year was at 3.977% (+2), the five-year at 4.002% (+2), the 10-year at 4.201% (flat), the 20-year at 4.555% (-1) and the 30-year at 4.489% (-1) at the close.

Primary to come
The California Community Choice Financing Authority is set to price this week $1.125 billion of Clean Energy Project green revenue bonds, Series 2024D. RBC Capital Markets.

The Connecticut Housing Finance Authority (Aaa/AAA//) is set to price Wednesday $298.155 million of housing mortgage finance program social bonds, Series 2024F, consisting of $206.405 million of tax-exempts, 2024 Subseries F-1, and $91.75 million of taxables, 2024 Subseries F-2. Morgan Stanley.

The Ohio Housing Finance Agency (Aaa///) is set to price Wednesday $275 million of residential mortgage non-AMT social revenue bonds. J.P. Morgan.

The Regents of the University of Colorado (Aa1//AA+/) is set to price Wednesday $220.465 million of university enterprise refunding revenue bonds, Series 2024A. Morgan Stanley.

The Katy Independent School District, Texas, (Aaa/AAA//) is set to price Wednesday $215.085 million of PSF-insured unlimited tax refunding bonds, serials 2025-2045. BOK Financial Securities.

The Lamar Consolidated Independent School District, Texas, (Aaa/AAA//) is set to price Wednesday $190.99 million of PSF-insured unlimited tax refunding bonds, serials 2026-2044. RBC Capital Markets.

Fircrest Properties, Washington, (/AA//) is set to price Wednesday $186.54 million of Washington State Department of Social and Health Services Project lease revenue sustainability bonds, serials 2028-2044, term 2049. BofA Securities.

The Virginia Small Business Financing Authority (//BBB/) is set to price Thursday $166.685 million of revenue bonds, consisting of $143.665 million of Series 2024A, $9.48 million of Series B-1 entrance fee redemption bonds and $13.54 million of Series B-2 entrance fee redemption bonds. HJ Sims.

The Conroe Independent School District, Texas, (Aaa/AAA//) is set to price Thursday $129.49 million of PSF-insured unlimited tax refunding bonds, serials 2026-2036. Jefferies.

North Slope Borough, Alaska, (/AA/AA/AA+/) is set to price Wednesday $128.745 million of GOs, consisting of $104.085 million of general purpose bonds, Series 2024A, serials 2025-2036; and $24.66 million of school bonds, Series 2024B, serials 2025-2036. Jefferies.

The Maryland Health and Higher Educational Facilities Authority (A1/A+//) is set to price Thursday $117.015 million of Lifebridge Health Issue revenue bonds, terms 2049, 2054. BofA Securities.

The Intermountain Power Agency, Utah, (Aa3//AA-/) is set to price Thursday $114.62 million of tax-exempt and taxable power supply revenue bonds. Goldman Sachs.

The California Housing Finance Agency (Aa2/AA//) is set to price Wednesday $107.58 million of affordable housing sustainable revenue bonds. Morgan Stanley.

The Ohio Water Development Authority (/AAA//) is set to price Thursday $102.02 million of Fresh Water Revolving Fund water development refunding revenue bonds, serial 2025-2042. Jefferies.

Competitive:
The Collin County Community College District, Texas, is set to sell $171.29 million of consolidated fund revenue bonds at 11:30 a.m. Wednesday.

St. Johns County, Florida, (Aaa/AA+//) is set to sell $105.17 million of special obligation revenue bonds, Series 2024A, at 10:30 a.m. Wednesday.