Market waits to digest $17 billion new-issue calendar
8 min read
Municipals were weaker out long as the market prepared to digest a $17 billion new-issue calendar. U.S. Treasury yields rose and equities ended mixed.
The two-year muni-UST ratio Monday was at 70%, the five-year at 70%, the 10-year at 75% and the 30-year at 91%, according to Municipal Market Data’s 3 p.m. ET read. ICE Data Services had the two-year at 69%, the five-year at 72%, the 10-year at 75% and the 30-year at 92% at 4 p.m.
Issuance this week soars to nearly $17 billion, as investors are “bracing for another hefty serving the following week as issuers try to get their deals to market ahead of the FOMC meeting and Juneteenth holiday,” said Birch Creek strategists.
“With June being a typically a strong month for munis as reinvestment demand has been typically high for the month, we are expected to have an estimated $61 billion in principal and interest redemptions which will help push us back into the green for the year,” said Jason Wong, vice president of municipals at AmeriVet Securities.
Over the last 10 years, the month of June has been historically positive, he said.
“Demand should continue to outpace supply this month and with yields and ratios being higher than they were a year ago, we should expect to see positive numbers for June,” Wong said.
Last month “felt reassuringly pedestrian compared to the near-historic volatility that occurred in April as a result of President [Donald] Trump’s ‘Liberation Day’ tariff announcement, which now feels like a lifetime ago,” said J. Robert Lind, principal and founder of Lind Capital Partners.
After two straight months of negative performance, munis saw positive returns at 0.06%, though year-to-date munis are seeing losses of -0.96%.
High-yield munis saw gains of 0.07% in May and losses of -0.91% year-to-date. Taxables saw returns of 0.32% last month and 1.39% during the first five months of the year.
USTs saw losses of -1.03% for the month, but gains of 2.51% YTD, while corporates are essentially flat at -0.01% for May and gains of 2.26% YTD.
“While the noise surrounding the threat to the tax-exemption of municipal bonds abated, for now, headwinds such as elevated supply, interest rate volatility, and reduced reinvestment flows still presented challenges for the market at large in May,” Lind said.
To close out May, the muni market was firmer last week but underperformed after the front end of the curve ended six to eight basis points lower and only two basis points lower out long, Birch Creek strategists said.
Bids wanteds rose 5% compared to recent averages, “with a variety of account types using the slower holiday-shortened week to trim credit risk, sell low book yields, and raise cash in anticipation of the outsized primary calendar slated to come over the next two weeks,” they said.
On the demand side, muni mutual funds saw inflows for the fifth consecutive week, according to LSEG Lipper, with investment-grade funds taking in $376 million, Birch Creek strategists said.
“The combination of heavy June reinvestment cash and a return to inflows has led to a healthy two-way market and improved liquidity,” they said.
While dealers have “reported many different inquiries out there … buyers remain patient and are not looking to chase prices higher,” Birch Creek strategists said.
In the primary market Monday, BofA Securities accelerated a preliminary pricing for Prince George’s County, Maryland’s (Aa1/AAA/AAA/) $238.6 million of general obligation consolidated public improvement bonds, with 5s of 8/2026 at 2.86%, 5s of 2030 at 2.98%, 5s of 2035 at 3.48%, 5s of 2040 at 4.05% and 5s of 2045 at 4.50%, callable 8/1/2035.
AAA scales
MMD’s scale saw cuts 10 years and out: The one-year was at 2.77% (-2bp, no June roll) and 2.75% (-2bp, no June roll) in two years. The five-year was at 2.82% (-2bp, no June roll), the 10-year at 3.35% (+2bp, no June roll) and the 30-year at 4.54% (+2) at 3 p.m.
The ICE AAA yield curve was cut one to four basis points: 2.78% (+1) in 2026 and 2.71% (+1) in 2027. The five-year was at 2.85% (+1), the 10-year was at 3.28% (+2) and the 30-year was at 4.53% (+4) at 4 p.m.
The S&P Global Market Intelligence municipal curve saw cuts out long: The one-year was at 2.78% (-2) in 2025 and 2.76% (-2) in 2026. The five-year was at 2.81% (-2), the 10-year was at 3.34% (+2) and the 30-year yield was at 4.54% (+2) at 4 p.m.
Bloomberg BVAL saw cuts on yields out: 2.74% (-1) in 2025 and 2.76% (-1) in 2026. The five-year at 2.85% (unch), the 10-year at 3.30% (unch) and the 30-year at 4.51% (+2) at 4 p.m.
Treasuries saw losses.
The two-year UST was yielding 3.94% (+4), the three-year was at 3.864% (-4), the five-year at 4.013% (+4), the 10-year at 4.457% (+5), the 20-year at 4.992% (+6) and the 30-year at 4.987% (+6) near the close.
Primary to come
The Indiana Finance Authority (Aa2/AA/AA/) is set to price Tuesday $1.502 billion of Indiana University health system revenue bonds. J.P. Morgan.
The Public Utilities Commission of the City and County of San Francisco (Aa2/AA-//) is set to price Thursday $994.25 million of San Francisco water revenue and refunding bonds. J.P. Morgan.
The Downtown Revitalization Public Infrastructure District, Utah, is set to price Thursday $869 million of SEG Redevelopment project sales tax revenue bonds, consisting of $651.265 million of Series 2025A (A1///) and $217.735 million of Series 2025B (A3///). Goldman Sachs.
The Board of Regents of the University of Texas System (Aaa/AAA//) is set to price Tuesday $800 million of revenue financing system refunding bonds. Wells Fargo.
The Metropolitan Washington Airports Authority (Aa3/AA-/AA-/) is set to price Thursday $714.495 million of airport system revenue and refunding AMT bonds, serials 2026-2045, terms 2050, 2055. RBC Capital Markets.
The Bay Area Toll Authority is set to price with $512.965 million, consisting of $400 million of San Francisco Bay Area Toll Bridge revenue green bonds, climate bond certified (/AA/AA/) and $112.965 million of San Francisco Bay Area second subordinate toll bridge revenue bonds (/AA-/AA-/). Wells Fargo.
The Department of Water and Power of the City of Los Angeles (Aa2//AA-/AA) is set to price Thursday (retail Wednesday) $507.04 million of power system revenue bonds, serial 2030-2035. Barclays.
Los Angeles (/AA/AA+/) is set to price Tuesday $476.61 million of wastewater system revenue refunding bonds. Jefferies.
The Clifton Higher Education Finance Corp. (Aaa///) is set to price Wednesday $457.195 million of International Leadership of Texas, Inc. education revenue and refunding bonds, serials 2026-2055. PNC Capital Markets LLC.
The Las Vegas Valley Water District, Nevada, (Aa1/AA+//) is set to price Tuesday $388.9 million of limited tax general obligation water improvement bonds, serials 2029-2045, terms 2050, 2055. BofA Securities.
The Utah Housing Corp. (Aa2///) is set to price Wednesday $350 million of single-family mortgage bonds. RBC Capital Markets.
The Prosper Independent School District, Texas, (Aaa//AAA/) is set to price Tuesday $300 million of unlimited tax school building bonds, PSF insured, serials 2027-2055. Piper Sandler.
The Illinois Finance Authority (/A+/AA-/) is set to price Thursday $297.005 million for UChicago Medicine revenue bonds. J.P. Morgan.
The Colorado Health Facilities Authority (Aa2/AA/AA/) is set to price Wednesday $282.38 million of AdventHealth Obligated Group hospital revenue bonds J.P. Morgan.
Palm Beach County, Florida, is set to price Wednesday $235.8 million of Provident Group – PBAU Properties II LLC – Palm Beach Atlantic University Project revenue bonds. J.P. Morgan.
Tacoma, Washington, (/AA/AA-/) is set to price Tuesday $224.315 million of electric system revenue and refunding green bonds. Raymond James.
The Madison Metropolitan School District, Wisconsin, is set to price Tuesday $200 million of tax-exempt GO promissory notes and taxable GO promissory notes. Baird.
The Jackson County School District, Georgia, (Aa1/AA+//) is set to price Thursday $200 million of general obligation school bonds, insured by the Georgia State Aid Intercept Program. Raymond James.
The Nebraska Investment Finance Authority (/AAA//) is set to price Wednesday $188.29 million of single-family revenue bonds, non-AMT social bonds and taxables. J.P. Morgan.
The San Marcos Unified School District, California, (Aa3///) is set to price $186.23 million of Series A Election 2024 GOs and 2025 GO refunding bonds. RBC Capital Markets.
The Swarthmore Borough Authority, Pennsylvania, (Aaa/AAA//) is set to price Tuesday $165.225 million of Swarthmore College Revenue bonds. Goldman Sachs.
The Oklahoma Water Resources Board (/AAA/AAA/) is set to price Tuesday $160 million of revolving fund revenue bonds – drinking water program. Raymond James.
Seattle (Aa1/AA+//) is set to price Wednesday $155.565 million of drainage and wastewater system improvement and refunding revenue bonds, serials 2026-2055. BofA Securities.
The Louisiana Public Facilities Authority is set to price Wednesday $154.98 million of Acadiana Renaissance Charter Academy Project revenue bonds. HJ Sims.
The School District of Seminole County, Florida, (Aa3/AA//) is set to price Tuesday $150.13 million of sales tax revenue bonds, Series 2025, insured by: Assured Guaranty Inc., serials 2025-2034. Raymond James.
The Mid-Bay Bridge Authority (/AA//) is set to price Tuesday $139.76 million of 1st senior lien revenue refunding bonds, insured by: Assured Guaranty Inc., serials 2026-2040. Goldman Sachs.
The Dormitory Authority of the State of New York (Aa2///) is set to price Wednesday $135.565 million of Orange-Ulster issue master Boces Program Lease revenue bonds serials 2026-2044. Roosevelt & Cross.
The Alaska Housing Finance Corp. (Aa1/AA+//) is set to price Tuesday $135 million of state capital project bonds, serials 2026-2036. RBC Capital Markets.
The Sunnyvale School District, California, (/AAA//) is set to price Wednesday $134.795 million of general obligation and refunding bonds. Stifel.
Garland, Texas, (/AA+/AA+/) is set to price Wednesday $116.59 million of general obligation bonds and combination tax and revenue certificates of obligation. J.P. Morgan.
The Ventura Unified School District, California, (Aa3///) is set to price $113 million of general obligation bonds, serials 2026-2027, 2035-2045, term 2055. RBC Capital Markets.
Georgetown, Texas, (/AA-/AA-/) is set to price Thursday $106.495 million of utility system revenue bonds, serials 2026-2045, terms 2050, 2055. HilltopSecurities Inc.
The Alabama Housing Finance Authority (Aa1///) is set to price Tuesday $100 million of collateralized single-family mortgage revenue bonds, non-AMT, serials 2026-2037, terms 2040, 2045, 2050, 2055, 2056. Raymond James.
Competitive
Pennsylvania (Aa2/A+/AA/) is set to take bids on $853.155 million general obligation bonds, First Refunding Series A of 2025, at 11 a.m. eastern Wednesday.
Pennsylvania is also taking bids on $317.41 million general obligation bonds, First Refunding Series B of 2025, at 11:30 a.m. Wednesday.
The Fayette County Board of Education, Kentucky, takes bids on $229.97 million general obligation bonds, Series 2025A (Kentucky School District Enhancement Program), at 11 a.m. Thursday.
New Mexico (Aa2/AA//) takes bids on $214.35 million capital projects general obligation bonds, Series 2025, at 10 a.m. Wednesday.
The Maryland Department of Transportation (Aa1/AAA/AA+/) takes bids on $200 million consolidated transportation bonds, Series 2025A, at 10:30 a.m. Wednesday.
Fort Worth, Texas, (Aa1//AA/) takes bids on $188.995 million water and sewer system revenue bonds, Series 2025, at 10:30 a.m. Wednesday.
Virginia takes bids on $171.815 million general obligation bonds, Series 2025A, and refunding Bonds, Series 2025B, at 10:30 a.m. Thursday.
The Indian Prairie School District #204, Illinois, (Aa1/AAA//) takes bids on $151.095 million general obligation school building bonds Series 2025, at 11 a.m. Tuesday.
The Unified Government of Athens-Clarke County, Georgia, (Aa1//AAA/) takes bids on $135.425 million water and sewerage revenue refunding bonds, Series 2025, at 11 a.m. Tuesday.
The Virginia Public School Authority (Aaa/AAA/AAA/) takes bids on $105.495 million special obligation school financing bonds, Series 2025, at 10:15 a.m. Tuesday.
The Putnam County School District, Florida, (A2//A+/) takes bids on $100 million general obligation school bonds, Series 2025, at 11 a.m. Tuesday.
