Munis quiet ahead of $14.8B new-issue calendar

Municipals were little changed Friday, no more than a basis point or two, ahead of $14.8 billion new-issue calendar that boasts several billion-plus dollar deals. U.S. Treasury yields were little changed and equities ended up.

The two-year muni-UST ratio Friday was at 56%, the five-year at 58%, the 10-year at 70% and the 30-year at 89%, according to Municipal Market Data’s 3 p.m. ET read. ICE Data Services had the two-year at 57%, the five-year at 58%, the 10-year at 69% and the 30-year at 90% at a 4 p.m. read.

Munis have outperformed USTs and corporates by more than 1.0% month-to-date on the heels of this rally so far, BofA strategists said.

Long-end muni yields even fell on Wednesday despite a UST selloff following the Federal Reserve’s decision to cut rates 25 basis points, as the market expected.

Muni yields were little changed, though slightly weaker, on Thursday and Friday.

Muni performance year-to-date has lagged far behind USTs and corporates, but BofA strategists believe the muni outperformance against USTs and corporates for September month-to-date will continue to yearend, and the “bulk” of the outperformance has not happened yet.

Issuance for the week of Sept. 22 is an estimated $14.78 billion, with $11.789 billion of negotiated deals and $2.991 billion of competitive deals on tap, according to LSEG.

California leads the negotiated calendar with $2.3 billion of various purpose general obligation bonds, followed by the Texas Water Development Board of $1.871 billion of state water revenue bonds and Connecticut (Aa2/AA-/AA/AA+) with $1.815 billion of GOs.

The competitive calendar is led by Minnesota with $1.266 billion of GOs in six series.

While volume is elevated next week, supply has slowed during the second half of the year, as substantial amount of issuance had been pulled forward, Barclays strategists led by Mikhail Foux said.

The 30-day visible supply is slightly below average at a “manageable” $14 billion, they said.

“This year’s supply dynamics have played a substantial role in cheapening certain parts of the muni market that have been more active issuers of bonds,” Barclays strategists said.

For example, California’s net issuance was heavy to start 2025 but slowed over the past few months, they said.

Due to this, the market segment became cheap early on but has been outperforming the investment-grade index since the end of July, and California paper has become quite rich, Barclays strategists said.

However, New York and Texas paper remained heavy over the summer, and the states’ paper performance have lagged California as a result, they said.

Over the next 30 days, net issuance of Massachusetts and Florida paper is expected to be negative, which should support them, Barclays strategists said.

“California and Texas will become heavy issuers again; while Texas bonds look relatively cheap, California paper is rich and might start cheapening to a degree due to deteriorating market technicals,” they said.

AAA scales
MMD’s scale was little changed: The one-year was at 2.12% (unch) and 2.02% (unch) in two years. The five-year was at 2.15% (unch), the 10-year at 2.88% (unch) and the 30-year at 4.22% (+1) at 3 p.m.

The ICE AAA yield curve was cut one to two basis points: 2.12% (+2) in 2026 and 2.05% (+1) in 2027. The five-year was at 2.14% (+1), the 10-year was at 2.85% (+1) and the 30-year was at 4.23% (+2) at 4 p.m.

The S&P Global Market Intelligence municipal curve was little changed: The one-year was at 2.11% (unch) in 2025 and 2.01% (unch) in 2026. The five-year was at 2.16% (unch), the 10-year was at 2.88% (unch) and the 30-year yield was at 4.22% (+1) at 3 p.m.

Bloomberg BVAL was cut up to two basis points out long: 2.04% (unch) in 2025 and 2.00% (unch) in 2026. The five-year at 2.10% (unch), the 10-year at 2.83% (unch) and the 30-year at 4.19% (+2) at 4 p.m.

Treasuries were little changed.

The two-year UST was yielding 3.575% (+1), the three-year was at 3.56% (+1), the five-year at 3.681% (+2), the 10-year at 4.128% (+2), the 20-year at 4.711% (+2) and the 30-year at 4.745% (+2) at the close.

Primary to come
California (Aa2/AA-/AA//) is set to price Thursday $2.3 billion of GOs, consisting of $700 million of various purpose GOs and $1.6 billion of various purpose refunding GOs. Wells Fargo.

The Texas Water Development Board (/AAA/AAA/) is set to price Wednesday $1.871 billion of state water implementation revenue fund for Texas revenue bonds (Master Trust). BofA Securities.

Connecticut (Aa2/AA-/AA/AA+) is set to price Wednesday $1.815 billion of GOs, consisting of $300 million of taxable Series B bonds, $800 million of Series C bonds and $715 million of Series 2025 refunding bonds. Morgan Stanley.

Texas (/AAA/AAA/) is set to price Thursday $761.98 million of GO water financial assistance bonds (State Water Plan), with $444.725 million of Series 2025E bonds and $317.245 million of taxable Series 2025F bonds. BofA Securities.

The San Diego Public Facilities Financing Authority (/AA-/AA/) is set to price Tuesday $625.87 million of lease revenue and lease revenue refunding bonds (capital improvement and refunding projects), Series 2025A. Jefferies.

The Michigan State Housing Development Authority (Aa2/AA+//) is set to price Thursday $547.5 million of single-family mortgage revenue bonds, consisting of $412.105 million of non-AMT bonds, Series 2025C, and $135.395 million of taxables, Series 2025D. RBC Capital Markets.

The Washington Health Care Facilities Authority (/A/A/) is set to price Tuesday $400 million of revenue bonds (Providence St. Joseph Health), consisting of $200 million of fixed-rate Series 202B-1 bonds and $200 million of term-rate Series 202B-2 bonds. J.P. Morgan.

San Antonio, Texas, (Aa1/AA+/AA/) is set to price Tuesday $297.87 million of water system junior lien revenue refunding bonds, Series 2025C. BofA Securities.

The Missouri Health and Educational Facilities Authority (A2//A/) is set to price Tuesday $253.545 million of health facilities revenue refunding bonds (CoxHealth), consisting of $135.88 million of Series 2025A and $117.665 million of Series 2025B. RBC Capital Markets.

The Public Hospital District No. 4, Washington, is set to price Wednesday $174.13 million of nonrated hospital revenue refunding bonds (Snoqualmie Valley Health), Series 2025A. Piper Sandler. 

Quincy, Massachusetts, is set to price Tuesday $170.222 million of GO bond anticipation notes. Ramirez.

The State Center Community College District, California, (Aa1/AA+//) is set to price Tuesday $137.28 million of GOs, consisting of $105 million of Election of 2016 GOs, Series 2025D, and $32.28 million 2025 GO refunding bonds. RBC Capital Markets.

The Ohio State Treasurer (Aa1/AA+/AA+/) is set to price Monday $125.52 million of capital facilities lease-appropriation variable rate bonds (Adult Correctional Building Fund Projects), Series 2025B. Piper Sandler.

The New York City Housing Development Corp. (Aa2/AA+//) is set to price Thursday $121.46 million of non-AMT sustainable development multi-family housing revenue bonds, Series 2025F. J.P. Morgan.

The Northshore School District No. 417, Washington, (Aaa///) is set to price Tuesday $117.56 million of unlimited tax refunding GOs. Piper Sandler.

The Virginia Housing Development Authority (Aa1/AA+//) is set to price Monday $111.795 million of rental housing bonds, Series 2025E. BofA Securities.

The Valparaiso 21st Century School Building Corp. (/AA+//) is set to price Tuesday $105.415 million of Indiana State Aid Intercept Program-insured unlimited ad valorem property tax first mortgage refunding bonds. Stifel.

Competitive:
Minnesota (Aaa/AAA/AAA/) is set to sell $294.915 million of state trunk highway GOs, Series 2025B, at 10:15 a.m. Eastern Tuesday; $275.215 million of state various purpose GOs, Series 2025A, Bidding Group 1, at 10:45 a.m. Tuesday; $275.2 million of state various purpose GOs, Series 2025A, Bidding Group 2, at 11:15 a.m. Tuesday; $236.195 million of state various purpose refunding GOs, Series 2025D, at 11:45 a.m. Tuesday; $158.69 million of state trunk highway refunding GOs, Series 2025E, at 12:15 p.m. Tuesday; and $25.6 million of taxable various purpose bond GOs, Series 2025C, at 12:45 p.m. Tuesday.

The North Texas Municipal Water District (Aa2/AAA//) is set to sell $286.84 million of regional wastewater system revenue refunding and improvement bonds at 11:30 a.m. Thursday.

The North Texas Municipal Water District (Aa1/AAA//) is set to sell $152.18 million of Upper East Fork wastewater interceptor system contract revenue refunding and improvement bonds at noon on Thursday.

The Pinellas County School District is set to sell $150 million of tax anticipation notes at 11 a.m. Thursday.

The Park Hill School District, Missouri, /AA-//) is set to sell $128 million of GOs (Missouri Direct Deposit Program) at 11 on Tuesday.

The Oldham County School District, Kentucky, (Aa3///) is set to sell $106.415 million of GOs (Kentucky School District Enhancement Program), Series 2025B, at 10:30 a.m. on Tuesday.

Frank Gargano contributed to this story.