Massive new-issue day ahead of CPI
6 min read
Municipals were steady again Tuesday as the market digested a large new-issue calendar. U.S. Treasuries were little changed and equities ended up. The consumer price index will be released Wednesday and could impact Federal Open Market Committee thinking, although a cut next week appears unrealistic no matter what the inflation report shows.
The elevated new-issue market comes on the heels of one of the largest weeks of issuance.
“Overall, the market absorbed the supply, as most deals were placed with minimal balances or none,” said Chris Brigati, CIO and managing director of SWBC, and Ryan Riffe, SVP of capital markets at the firm.
There were a couple of times “where it took the full order period for maturities to become subscribed/oversubscribed, perhaps indicating exhaustion at the periphery of some deals,” they said.
Nuveen analysts predicted “supply should be challenging again this week, but the reinvestment money should provide support.”
“Also, intermediate tax-exempt bonds yielding 4% and longer bonds at 5% continue to pique institutional and individual investor interest,” said Anders S. Persson, Nuveen’s chief investment officer for global fixed income, and Daniel J. Close, Nuveen’s head of municipals.
The two-year muni-UST ratio Tuesday was at 67%, the five-year at 68%, the 10-year at 75% and the 30-year at 92%, according to Municipal Market Data’s 3 p.m. ET read. ICE Data Services had the two-year at 66%, the five-year at 67%, the 10-year at 72% and the 30-year at 91% at 4 p.m.
In munis, Matt Fabian, a partner at Municipal Market Analytics said “buyer interest [last week] seemed to follow attractive pricing: multiple issues continued to be well bought after sale.”
“Multiple issues continued to be well bought after sale — the University of Texas 5s of ’36 rallied 8bps, Las Vegas Waters 5s of ’45 by 2bps, and even the Chicago GO deal, which was bumped as much as 18bps mid-primary, saw 6s of ’50 trade up another 3bps in the open market,” he said.
“Those 6s did well enough to tighten spreads for other benchmark Chicago maturities, investors maybe signaling some relief from worries over potential city liquidity/borrowing challenge,” Fabian said.
“Long term, higher coupons and higher yields like those may become more necessary to continue to deliver a record pace calendar,” Fabian said. But, “the $100 billion summer reinvestment has pushed off that potential moment of reckoning a bit farther.”
Persson and Close added: “Look for outsized new issuance to continue through the summer as issuers take advantage of outsized reinvestment money.”
In the primary market Tuesday, Goldman Sachs priced for the California Community Choice Financing Authority $1.604 billion of green clean energy project revenue bonds, Series 2025B, with 5s of 11/2028 at 3.59%, 5s of 11/2030 at 3.80%, 5s of 11/2034 at 4.32% and 5s of 1/2056 with a mandatory tender of 11/1/2035 at 4.48%, callable 8/1/2035.
BofA Securities priced for Philadelphia (A1/A+/A+/) $773.04 million of tax-exempt GOs. The first tranche, $301.09 million of Series 2025A bonds, saw 5s of 8/2033 at 3.45%, 5s of 2035 at 3.76%, 5s of 2040 at 4.37% and 5.25s of 2045 at 4.70%, callable 8/1/2035.
The second tranche, $471.95 million of Series 2025C refunding bonds, saw 5s of 2/2026 at 2.98%, 5s of 8/2030 at 3.14%, 5s of 8/2035 at 3.76% and 5s of 8/2037 at 4.01%, callable 8/1/2035.
BofA Securities priced for the Pennsylvania Housing Finance Agency (Aa1///) $510.05 million of non-AMT social single-family mortgage revenue bonds, Series 2025-149A, with 5s of 4/2026 at 3.06%, 5.25s of 4/2030 at 3.42%, 5.25s of 10/2030 at 3.52%, 4.4s of 4/2035 at par, 4.45s of 10/2035 at par, 4.75s of 10/2040 at 4.83%, 5.1s of 10/2045 at par, 5.15s of 10/2050 at par and 6.5s of 10/2055 at 4.07%, callable 10/1/2033.
Morgan Stanley priced for the New York City Housing Development Corp. (Aa2/AA+//) $501.18 million of sustainable development multi-family housing revenue bonds.
The first tranche, $133.665 million of sustainable development Series 2025C-1 bonds, saw all bonds priced at par: 3.65s of 11/2030, 4.3s of 5/2035, 4.3s of 11/2035, 4.75s of 11/2040, 5s of 11/2045, 5.05s of 11/2050, 5.125s of 11/2055, 5/2s of 11/2060 and 5.25s of 5/2064, callable 11/1/2032.
The second tranche, $247.515 million of sustainable development Series 2025C-2 bonds, with 3.75s of 5/2065 with a mandatory tender of 7/2/2029 price at par, callable 5/1/2028.
Details for the third tranche, $120 million of term rate Series 2025E bonds, were unavailable as of 3:30 p.m.
J.P. Morgan priced for the North Carolina Medical Care Commission (Aa3/AA-/AA-/) $488.78 million of Duke University Health System health care facilities revenue bonds. The first tranche, $324.45 million of Series 2025A, saw 5s of 6/2026 at 2.94%, 5s of 2030 at 3.10%, 5s of 2035 at 3.72%, 5s of 2040 at 4.39% and 5s of 2042 at 4.58%, callable 6/1/2035.
The second tranche, $164.33 million of Series 2025B, saw 5s of 6/2055 with a mandatory tender of 6/3/2030 at 3.42%, callable 6/4/2030.
J.P. Morgan priced for the Lower Colorado River Authority (A2/A/AA-/) $488.135 million of refunding revenue bonds. The first tranche, $304.21 million of Series 2025A, saw 5s of 5/2026 at 2.93%, 5s of 2030 at 3.06%, 5s of 2035 at 3.68%, 5s of 2040 at 4.31% and 5s of 2041 at 4.41%.
The second tranche, $183.925 of Series 2025B, saw 5s of 5/2032 at 3.31%, noncall.
J.P. Morgan priced for Rhode Island (Aa2/AA/AA+/) $196.26 million of GOs, with 5s of 5/2026 at 2.80%, 5s of 2030 at 2.91%, 5s of 2035 at 3.53%, 5s of 2040 at 4.13% and 5s of 2045 at 4.57%, callable 5/1/2035.
In the competitive market, Massachusetts (Aa1/AA+/AA+/) sold $385 million of GO consolidated loan of 2025 bonds, Series C, to J.P. Morgan, with 5s of 6/2040 at 4.08%, 5s of 2045 at 4.57%, 5s of 2049 at 4.76% and 5s of 2053 at 4.83%, callable 6/1/2035.
The state also sold $215 million of GO consolidated loan of 2025 bonds, Series B, to Morgan Stanley, with 5s of 6/2031 at 2.88%, 5s of 2035 at 3.34% and 5s of 2039 at 3.91%, callable 6//12035.
Lastly, the state sold $100 million of taxable GO consolidated loan of 2025 bonds, Series D, to J.P. Morgan.
The Iowa State Board of Regents (Aa2/AA-//) sold $138.845 million of parking system revenue refunding bonds to Wells Fargo, with 5s of 7/2026 at 2.85%, 5s of 2030 at 2.96%, 5s of 2035 at 3.57%, 5s of 2040 at 2.19%, 4.625s of 2045 at 4.781% and 5s of 2050 at 4.89%, callable 7/1/2035.
AAA scales
MMD’s scale was unchanged: The one-year was at 2.72% and 2.70% in two years. The five-year was at 2.79%, the 10-year at 3.34% and the 30-year at 4.56% at 3 p.m.
The ICE AAA yield curve was bumped up to two basis points: 2.73% (unch) in 2026 and 2.65% (-2) in 2027. The five-year was at 2.77% (-2), the 10-year was at 3.26% (-1) and the 30-year was at 4.53% (unch) at 4 p.m.
The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 2.73% in 2025 and 2.71% in 2026. The five-year was at 2.79%, the 10-year was at 3.34% and the 30-year yield was at 4.56% at 4 p.m.
Bloomberg BVAL was unchanged: 2.71% in 2025 and 2.73% in 2026. The five-year at 2.83%, the 10-year at 3.30% and the 30-year at 4.52% at 4 p.m.
Treasuries were little changed.
The two-year UST was yielding 4.009% (flat), the three-year was at 3.985% (flat), the five-year at 4.081% (flat), the 10-year at 4.469% (-1), the 20-year at 4.956% (-1) and the 30-year at 4.932% (-1) near the close.
Primary to come
The Private Colleges and Universities Authority (Aa2/AA//) is set to price Wednesday $1.034 million of Emory University revenue bonds. RBC Capital Markets.
The Metropolitan Government of Nashville and Davidson County (Aa2/AA//AA/) is set to price Thursday $451.895 million of water and sewer revenue refunding and improvement bonds. BofA Securities.
The Clifton Higher Education Finance Corp. (/AAA//) is set to price Wednesday $240 million of PSF-insured education revenue bonds and refunding bonds. Baird.
The Shelby County Health, Educational and Housing Facility Board, Tennessee, (A1/AA//) is set to price Wednesday $195.44 million of fixed-rate and long-term-rate Methodist Le Bonheur Healthcare revenue bonds, insured by Assured Guaranty. J.P. Morgan.
The Massachusetts Development Finance Agency (/A//) is set to price Thursday $179.03 million of Tufts University student housing project revenue bonds. Barclays.
The Santa Rosa High School District (Aa3///) is set to price Wednesday $100 million of Election of 2022 GOs. Raymond James.
Competitive
The Horseheads Central School District, New York, is set to sell $102 million of GO bond anticipation notes at 10:30 a.m. Wednesday.
The Newburgh Enlarged City School District, New York, is set to sell $100 million of GO bond anticipation notes at 11 a.m. Wednesday.
Alex Walters contributed to this story.
