Municipals were steady in secondary trading Tuesday as a heavy new-issue calendar took focus in the primary, led by an upsized $2.55 billion deal for the John F. Kennedy International Airport New Terminal One Project that saw yields bumped upon repricing. U.S. Treasury yields fell and equities were up near the close.

The two-year muni-to-Treasury ratio Tuesday was at 65%, the three-year at 66%, the five-year at 67%, the 10-year at 66% and the 30-year at 84%, according to Refinitiv Municipal Market Data’s 3 p.m. EST read. ICE Data Services had the two-year at 64%, the three-year at 65%, the five-year at 66%, the 10-year at 66% and the 30-year at 83% at 3:30 p.m.

Tuesday was a particularly busy day, led by two billion-dollar-plus deals.

In the primary market, BofA Securities priced and repriced for the New York Transportation Development Corp. (Baa3/BBB-/BBB-/) an upsized $2.5 billion of green AMT serial facilities revenue bonds for the John F. Kennedy International Airport New Terminal One Project, with yields bumped up to 10 basis points from Tuesday’s preliminary pricing: 5.25s of 6/2037 at 4.07% (-2), 5.25s of 2039 at 3.87% (-10) (Assured Guaranty insured), 5.25s of 2043 at 4.41% (-2), 5.25s of 2044 at 4.41% (-5), 5s of 2049 at 4.45% (-5) (Assured Guaranty insured), 5.25s of 2049 at 4.62% (-4), 4.625s of 2054 at 4.68% (unch) (Assured Guaranty insured), 5.5s of 2054 at 4.66% (-2), 5s of 2060 at 4.84% (-4), 5.25s of 2060 at 4.58% (-2) (Assured Guaranty insured) and 5.5s of 2060 at 4.74% (-2), callable 6/30/2033.

Morgan Stanley priced for the Public Energy Authority of Kentucky (A1///) $1.112 billion of gas supply revenue refunding bonds, 2024 Series B, with 5s of 8/2025 at 4.14%, 5s of 2/2029 at 4.10%, 5s of 8/2029 at 4.10% and 5s of 8/2032 at 4.10%, callable 5/1/2032.

BofA Securities priced for Ohio (Aa2/AA//) $440 million of Cleveland Clinic Health System Obligated Group hospital revenue bonds, Series 2024A, with 5s of 1/2032 at 3.12% and 5s of 2035 at 3.16%, callable 10/1/2034.

Morgan Stanley priced for the New York State Housing Finance Agency (Aa2///) $309.93 million of sustainability affordable housing revenue bonds. The first tranche, $81.545 million of Series C-1, saw all bonds price at par: 3.25s of 5/2025, 3.45s of 5/2029, 3.45s of 11/2029, 3.8s of 5/2034, 3.8s of 11/2034, 4s of 11/2039, 4.375s of 11/2044, 4.5s of 11/2049, 4.65s of 11/2054, 4.75s of 11/2059 and 4.8s of 5/2068, callable 5/1/2032.

The second tranche, $228.385 million of Series C-2, saw all bonds price at par: 3.5s of 11/2063 with a put/tender date of 5/1/2027, callable 3/1/2026; and 3.6s of 11/2063 with a mandatory tender of 5/1/2029, callable 1/1/2027.

Loop Capital Markets priced for the Pennsylvania Turnpike Commission (Aa3/AA-/AA-/AA-/) $300 million of turnpike revenue bonds, Series C of 2024, with 5s of 12/2025 at 3.15%, 5s of 2029 at 2.96%, 5s of 2034 at 3.01%, 5s of 2039 at 3.25%, 5s of 2044 at 3.74%, 5s of 2049 at 3.98% and 5.25s of 2054 at 4.01%, callable 12/1/2034.

Wells Fargo priced for the Oregon Department of Transportation (/AA//) $236.975 million of social grant anticipation revenue bonds, Series 2024, with 5s of 5/2025 at 3.24%, 5s of 2029 at 3.03%, 5s of 2034 at 3.07% and 5s of 2039 at 3.28%, callable 5/15/2034.

Barclays priced for the Massachusetts Development Finance Agency (A1///) $189.875 million of Northeastern University issue revenue refunding bonds, Series 2024A, with 5s of 10/2025 at 3.14%, 5s of 2029 at 3.00%, 5s of 2034 at 3.03%, 5s of 2039 at 3.27% and 5s of 2043 at 3.60%, callable 10/1/2034.

Raymond James priced for the Georgia Housing and Finance Authority (/AAA//) $134.78 million of single-family mortgage bonds. The first tranche, $113.75 million of non-AMT bonds, 2024 Series A, saw all bonds price at par — 3.85s of 12/2034, 4.1s of 12/2039, 4.45s of 12/2044, 4.6s of 12/2049 and 4.7s of 12/2054 — except for 5s of 12/2042 at 3.90%, callable 6/1/2033.

The second tranche, $21.03 million of taxables, 2024 Series B, saw all bonds price at par: 5.118s of 12/2024, 4.757s of 6/2029, 4.807s of 12/2029, 5.233s of 6/2034 and 5.233s of 12/2034, callable 6/1/2033.

Baird priced for the Richardson Independent School District, Texas, (Aaa/AAA//) $121.21 million of PSF-insured unlimited tax school building bonds, Series 2024, with 5s of 2/2025 at 3.34%, 5s of 2029 at 3.03%, 5s of 2034 at 3.04%, 5s of 2039 at 3.27%, 5s of 2044 at 3.64% and 4s of 2049 at 4.16%, callable 2/15/2034.

In the competitive market, Olathe, Kansas, sold $106.6 million of GO temporary notes, Series 2024-A, to BofA Securities, with 5s of 8/2025 at 3.45%, noncall.

Issuance this year is “well on its way” to $450 billion, mostly from the tax-exempt supply of new money projects, said Matt Fabian, a partner at Municipal Market Analytics.

Issuance stands at $218.736 billion year-to-date, with $195.149 billion of tax-exempts, or 89.2%, according to LSEG.

New-money deals rather than refundings are heavily driving the “topline” figure, Fabian said.

“This supports the scenario whereby bonds are being accelerated ahead of the election: a trend unlikely to slow down in the near term,” he noted.

Each of the last two weeks ended with more than 300,000 trades recorded by the MSRB: “a level that, in the last two years seems to correlate with stronger [separately managed account] demand/distributions and higher bond prices,” Fabian said.

The “average customer purchases remain near the bottom (smallest) of recent ranges: buying is via small lots,” he said.

To this point, traditional muni mutual fund flow data from LSEG Lipper and the Investment Company Institute “aren’t connecting well with yield changes, these both showing only small (or negative) inflows in the last two weeks while AAA yields rallied,” he said.

It’s possible “strong gains” in fund NAVs, particularly PREPA-boosted high-yield strategies, will start to “reclaim investor assets,” Fabian said.

The first half of June is seeing the best muni returns since 2016: “a solid reason for enthusiasm,” he said.

Munis are returning 1.75% so far this month, pushing year-to-date returns up to negative 0.19%.

The High-Yield Index remains at +2.76% in June, +4.45% YTD; Taxable Municipals at 1.84% MTD and +0.70% in 2024; and Short Index at +0.27% in June and +1.38% YTD.

There is an estimated “very short-term stability” in bank holdings, according to recent Fed data.

U.S. banks owned 12.9% of the market at $515.3 billion in Q1 2024, down 3.1% quarter-over-quarter and 9.1% from Q1 2023.

This potentially reflects “cheaper available bonds and heavy issuance slowing bank portfolios’ municipal runoff,” according to Fabian.

“But whether it is via many small buyers or not, demand has been present to put away a fairly massive recent supply,” he said.

Over the next several months, this trend could continue, he said.

AAA scales
Refinitiv MMD’s scale was unchanged: The one-year was at 3.09% and 3.05% in two years. The five-year was at 2.85%, the 10-year at 2.79% and the 30-year at 3.69% at 3 p.m.

The ICE AAA yield curve was bumped two basis points: 3.13% (-2) in 2025 and 3.06% (-2) in 2026. The five-year was at 2.86% (-2), the 10-year was at 2.81% (-2) and the 30-year was at 3.67% (-2) at 3:30 p.m.

The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 3.14% in 2025 and 3.08% in 2026. The five-year was at 2.85%, the 10-year was at 2.81% and the 30-year yield was at 3.68% at 3 p.m.

Bloomberg BVAL was bumped up to one basis point: 3.14% (unch) in 2025 and 3.09% (unch) in 2026. The five-year at 2.87% (unch), the 10-year at 2.80% (-1) and the 30-year at 3.70% (-1) at 3:30 p.m.

Treasuries were firmer.

The two-year UST was yielding 4.705% (-6), the three-year was at 4.434% (-7), the five-year at 4.237% (-7), the 10-year at 4.220% (-6), the 20-year at 4.464% (-6) and the 30-year at 4.356% (-5) at 3:30 p.m.

Primary to come
Raleigh, North Carolina, (Aa2/AA+/AA+/) is set to price Thursday $194.76 million of limited obligation bonds, Series 2024, serials 2024-2039. BofA Securities. 

The Indiana Finance Authority (/AAA/AAA/) is set to price Thursday $150 million of green State Revolving Fund Program bonds, Series 2024A, serials 2030-2044. BofA Securities. 

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