Municipals strengthened as much as three basis points on Friday as Treasuries rose in a flight-to-safety bid while stock prices plunged on fears that a coronavirus resurgence could derail the economic recovery in the U.S. and around the world.
“With the news out of the World Health Organization that a new and powerful COVID variant has been found in South Africa, global equity markets were slammed,” Peter Franks, director of market analysis for municipals at Refinitiv Municipal Market Data, said in a Friday market comment.
He noted that while Treasury yields fell sharply, municipals were reluctant to follow in lock step.
“For the few participants that made it to work today after yesterday’s holiday, they did see yields fall also but to a lesser extent,” he wrote Friday. “Monday, when participation numbers rise, the story may change and then again, so may the news.”
The triple-A benchmark scales were mostly stronger all along the curve in the abbreviated post-holiday trading session.
According to Refinitiv MMD, short yields were steady at 0.15% in 2022 but fell one basis point to 0.24% in 2023. The yield on the 10-year dropped three basis points to 1.06% while the yield on the 30-year declined three basis points to 1.51%.
The 10-year muni-to-Treasury ratio was calculated at 70.2% while the 30-year muni-to-Treasury ratio stood at 81.7%, according to MMD.
The ICE municipal yield curve showed bonds down one basis point in 2022 at 0.17% and down two basis points to 0.27% in 2023. The 10-year maturity fell three basis points to 1.08% and the 30-year yield dropped three basis points to 1.55%.
The 10-year muni-to-Treasury ratio was calculated at 73% while the 30-year muni-to-Treasury ratio stood at 84%, according to ICE.
Treasuries ended substantially stronger.
The 10-year Treasury fell 16 basis points to yield 1.49% while the 30-year Treasury fell 14 basis points to yield 1.83%.
Equities plunged in the short session.
The Dow Jones Industrial Average closed down 905 points, or 2.5%, the S&P 500 fell 225 points, or 2.3%, while the Nasdaq lost 354 points, or 2.3%.
Next week’s deals
IHS Ipreo estimates supply for the upcoming week at $6.5 billion, up sharply from the holiday-shortened week’s slate of under $1 billion. The week’s calendar is composed of $4.5 billion of negotiated deals and $2 billion of competitive sales.
Negotiated deals
The Illinois State Toll Highway Authority (Aa3/AA-/AA-/) is set to price $600 million of toll highway senior revenue bonds, serials 2039-2046, on Thursday. Loop Capital Markets.
The New York State Housing Finance Agency (Aa2///) is set to price $454.03 million of affordable housing revenue climate bond certified and sustainability bonds on Wednesday. Citigroup Global Markets Inc.
The Black Belt Energy Gas District (A2///) is set to price $423.875 million of gas project revenue bonds (Project No. 7). Goldman Sachs & Co. LLC.
The CSCDA Community Improvement Authority (nonrated) is set to price on Thursday $335.805 million of essential housing revenue refunding social bonds (Westgate Phase 1-Pasadena). Goldman Sachs & Co. LLC.
The Anaheim Public Financing Authority (A2/AA//AA+) is set to price on Wednesday $250.330 million of taxable convention center lease revenue refunding bonds, insured by Assured Guaranty Municipal Corp. Goldman Sachs & Co. LLC.
The New Mexico Educational Assistance Foundation (Aaa///) is set to price on Wednesday $208 million of AMT and taxable education loan bonds. RBC Capital Markets.
The Board of Supervisors of Louisiana (/AA//) is set to price on Wednesday $155.68 million of State University and Agricultural and Mechanical College taxable auxiliary revenue refunding bonds, insured by Build America Mutual, serials 2022-2043. Raymond James & Associates, Inc.
The Delaware River and Bay Authority (A1/A//) is set to price on Wednesday $151.92 million of revenue and revenue refunding forward delivery bonds. J.P. Morgan Securities LLC
Harris County, Texas, (Aaa//AAA/) is set to price $120 million of permanent improvement refunding bonds on Thursday. Wells Fargo Corporate & Investment Banking.
Freddie Mac (/AA+//) is set to price on Wednesday $110.82 million of multifamily M certificates series M-067, serial 2037. KeyBanc Capital Markets.
The Massachusetts Development Finance Authority (/BBB//) is set to price on Thursday $106.365 million of revenue green bonds, Springfield College Issue. HilltopSecurities.
Competitive sales
Tampa, Florida, (Aa2/AAA/AA/) is set to sell $102.62 million of non-ad valorem refunding and improvement sustainable revenue bonds at 11 a.m. eastern on Tuesday. The issuer will also sell $26.94 non-ad valorem refunding and improvement bonds at 10:30 a.m. eastern.
Illinois (Baa2/BBB/BBB-/) is set to sell $200 million of general obligation bonds at 10:15 a.m. eastern and $200 million of GOs at 10:45 a.m. eastern on Wednesday.
Westchester County, New York, is set to sell $135.115 million of general obligation bonds at 11 a.m. eastern on Wednesday.
Day-to-day slate
The Arizona Industrial Development Authority is on the day-to-day calendar with $177.97 million of revenue bonds (NewLife Forest Restoration Project), consisting of $110.045 million of senior federally taxable series 2021A (sustainability-linked bonds), term 2041 and $67.925 million of subordinate federally taxable series 2021B (sustainability-linked bonds), term 2046. Goldman Sachs & Co.
The Successor Agency to the Redevelopment Agency of the City and County of San Francisco (/AA///) is on the day-to-day calendar with $107.34 million of taxable third-lien tax allocation social bonds, 2021 Series A (affordable housing projects), serials 2023-2031, insured by Assured Guaranty Municipal Corp. Citigroup Global Markets.