PrintMunis steady to slightly firmer in spots, $1.8B NYC TFA deal comes to market
BY SourceMedia | MUNICIPAL | 04:07 PM ESTMunis were steady to slightly firmer in spots in the secondary market as a two-part $1.8 billion deal from the New York City Transitional Finance Authority took focus in the primary market. U.S. Treasuries richened and equities ended down.
The two-year muni-UST ratio Wednesday was at 64%, the five-year at 61%, the 10-year at 64% and the 30-year at 88%, according to Municipal Market Data's 3 p.m. EDT read. ICE Data Services had the two-year at 63%, the five-year at 60%, the 10-year at 64% and the 30-year at 86% at a 4 p.m. read.
The Investment Company Institute Wednesday reported inflows of $1.247 billion for the week ending Jan. 7, following $407 million of inflows the previous week.
Exchange-traded funds saw inflows of $1.437 billion after $1.379 billion of inflows the week prior, per ICI data. This is the third straight week inflows have topped $1 billion.
January got off to a good start, with muni yields rallying through Jan. 7. Since then, yields have been steady to slightly richer in spots, with muni yields seeing some strength in the front end and belly of the curve.
Over the past five years, there have been a couple of sell-offs in January, said Jeff Timlin, a partner at Sage Advisory.
"That had nothing to do with anything specific to munis, but market sell-offs and rates in general," he said.
"Several years ago, rates just went from one-handles all the way to like, three-, four-handles in a very short period of time in January," Timlin said.
However, in "normal markets," January is typically a seller's market, he noted.
Buyers have to kind of pick and choose what areas they want to participate in or just "pay up if you have to," he said.
In February and March, the market typically softens up a bit as things slow down.
Monies that come due in January through March are pretty slow in that regard, and issuance tends to pick up during that period, Timlin said.
This year appears to be playing out as a normal January, "where people are just getting back in their seats. If there's any cash that they have to put to work, getting to work on that as quickly as possible, but then kind of making a game plan for the year ahead in terms of how to deal with the new-issue market where that's going to [and] what trends are going to happen," he said.
Elsewhere, after a "historic surge" over the past two years elevated issuance this year should remain a technical headwind for municipals, said Steve Edwards, senior investment strategist at Morgan Stanley Wealth Management.
Issuance has gotten off to a slower start this year, but the second half of January ? and the foreseeable future ? will see supply "ramp up" to above-average levels, according to Timlin.
Next week will see some larger deals on the calendar, even though it's a holiday-shortened week.
Deals include the New York City Municipal Water Finance Authority with $725 million of water and sewer second resolution revenue bonds, the Massachusetts Clean Water Trust with $706 million of green state revolving fund bonds and CPS Energy with $668 million of variable rate junior lien refunding bonds, according to CreditSights.
Furthermore, the Maryland Health and Higher Education Facilities Authority is set to price $1.2 billion of MedStar Health revenue bonds at some point in the coming week.
After "several months of outperformance, short- to intermediate-maturity municipals have returned to historically 'rich' valuations relative to U.S. Treasuries," Edwards said.
Based on Morgan Stanley's
And "while relative valuations for long-end maturities appear somewhat 'cheaper' from a historical perspective, structural demand headwinds may reinforce this dynamic," he said.
New-issue market
In the primary market Wednesday, Ramirez priced for the New York City Transitional Finance Authority (Aa1/AAA/AAA/) $1.5 billion of tax-exempt future tax secured subordinate bonds, Fiscal 2026 Series F, Subseries F-1, with 5s of 2/2028 at 2.30%, 5s of 2030 at 2.36%, 5s of 2037 at 3.08%, 5s of 2041 at 3.59%, 5s of 2046 at 4.26%, 5s of 2050 at 4.56%, 5.5s of 2050 at 4.45% and 5s of 2053 at 4.62%, callable 2/1/2036.
BofA Securities priced for Raleigh, North Carolina, (Aaa/AAA//) $238.145 million of combined enterprise system revenue and revenue refunding bonds, with 5s of 12/2027 at 2.23%, 5s of 2031 at 2.31%, 5s of 2036 at 2.80%, 5s of 2041 at 3.29%, 5s of 2046 at 3.91%, 5s of 2051 at 4.19% and 5s of 2056 at 4.29%, callable 12/1/2035.
BofA Securities priced for the San Bernardino County Transportation Authority (/AAA/AAA/) $128.085 million of sales tax revenue bonds, 2026 Series A, with 5s of 3/2027 at 1.83%, 5s of 2031 at 1.82%, 5s of 2036 at 2.25% and 5s of 2040 at 2.90%, callable 3/1/2036.
In the competitive market, the New York City Transitional Finance Authority (Aa1/AAA/AAA/) sold $300 million of taxable future tax secured taxable subordinate bonds, Fiscal 2026 Subseries F-2, to Morgan Stanley
AAA scales
MMD's scale was little changed: 2.24% (-2) in 2027 and 2.24% (unch) in 2028. The five-year was 2.27% (unch), the 10-year was 2.67% (unch) and the 30-year was 4.21% (unch) at 3 p.m.
The ICE AAA yield curve was bumped up to two basis points: 2.24% (-2) in 2027 and 2.22% (-1) in 2028. The five-year was at 2.24% (-1), the 10-year was at 2.66% (-1) and the 30-year was at 4.16% (unch) at 4 p.m.
The S&P Global Market Intelligence municipal curve was little changed: The one-year was at 2.26% (-1) in 2027 and 2.24% (-1) in 2028. The five-year was at 2.27% (unch), the 10-year was at 2.67% (unch) and the 30-year yield was at 4.17% (unch) at 3 p.m.
Bloomberg BVAL was bumped up to two basis points: 2.29% (-2) in 2027 and 2.25% (-1) in 2028. The five-year at 2.23% (-1), the 10-year at 2.58% (-1) and the 30-year at 4.09% (unch) at 4 p.m.
Treasuries saw gains.
The two-year UST was yielding 3.517% (-2), the three-year was at 3.568% (-3), the five-year at 3.72% (-3), the 10-year at 4.141% (-4), the 20-year at 4.738% (-4) and the 30-year at 4.794% (-4) near the close.
Primary to come
The California Community Choice Financing Authority (A1///) is set to price Thursday $850 million of green clean energy project revenue bonds, consisting of $750 million of Series 2026A-1 and $100 million of Series 2026A-2. Morgan Stanley
Boys Town Village, Nebraska, (/AA-//) is set to price Thursday $317.68 million of revenue bonds (Boys Town Projects. Stifel.
The Maine Municipal Bond Bank (Aa2/AA//) is set to price Thursday $250 million of transportation infrastructure revenue bonds (TransCap Program), consisting of $190 million of Series 2026A highway and bridge bonds and $60 million of taxable Series 2026A general transportation project bonds. BofA Securities.
Queen Creek, Arizona, (/AA/AA/) is set to price Thursday $236.585 million of certificates of participation. BofA Securities.
The Tarrant County Cultural Education Facilities Finance Corp. (Aa2/AA-//) is set to price Thursday $235.75 million of hospital revenue bonds (Baylor Scott & White Health Project), Series 2026E. J.P. Morgan.
The Wisconsin Housing and Economic Authority (Aa2/AA+//) is set to price $195 million of social home ownership revenue bonds, consisting of $85 million of non-AMT Series A bonds, $75 million of taxable Series B bonds and $35 million of non-AMT Series C variable rate demand bonds. RBC Capital Markets.
The El Paso Independent School District, Texas, (Aaa//AAA/) is set to price Thursday $154.075 million of PSF-insured forward delivery unlimited tax refunding bonds, Series 2026A. RBC Capital Markets.
The Ohio Air Quality Development Authority (Baa3//BBB-/) is set to price Thursday $100 million of state of Ohio air quality revenue refunding bonds (Ohio Valley Electric Corp. Project), consisting of $50 million of Series 2026A and $50 million of Series 2026B. KeyBanc Capital Markets.
Competitive
The Kansas Development Finance Authority (Aaa//AAA/) is set to sell $277.82 million of revolving funds revenue bonds, Series 2026SRF, at 11:15 a.m. Thursday.
