The market is focusing on the New Jersey Economic Development Authority's $1.2 billion of school facilities construction refunding bonds scheduled to come to market Wednesday, with traders expecting the deal will price attractively.
The deal will be brought to market by Bank of America Merrill Lynch in two-parts: $632 million of federally taxable bonds and $527 million tax-exempts.
"I think the deal will be priced attractive because of its size, it is over $1 billion," one trader in New York said.
The bonds are rated A1 by Moody's Investors Service, A by Standard & Poor's and A-plus by Fitch Ratings.
The trader in New York noted that even though issuance is up this week, the bonds that have come to market were priced well.
"I think there will be some follow through today," the trader said. "I think the New Jersey deal is going to go well. It's more in the belly of the curve and you've got real nice block size, all 45 million, 50 million bucks. Bond will probably come relatively attractive to move those types of amounts in that part of the curve."
Another trader in New York expects the New Jersey bonds to trade cheaply because he is seeing a lot of bids wanted out
"I can tell you we are seeing a few more bids wanted on the Jersey side, and it's going to be traded cheaper because of that," he said. "It's going to get a ton of bids wanted so Jersey will trade cheap."
The second trader also said that he has been seeing New Jersey trading cheaper in the secondary.
"The New Jersey bonds coming today are definitely going to trade cheaper," he said. "New Jersey has been trading cheaper in the secondary for the last week or so.
Morgan Stanley will bring $209.8 million of motor license fund-enhanced turnpike subordinate special revenue bonds for the Pennsylvania Turnpike Commission Wednesday. The bonds are rated A3 by Moody's.
Raymond James & Associates will offer to retail $150 million of residential finance program non-alternative minimum tax and alternative minimum tax bonds for the Tennessee Housing Development Agency.
The $26 million of alternative minimum tax residential finance program bonds were priced at par to yield from 0.65% in 2016 to 1.10% in 2017. Two maturities in 2015 will be sold by sealed bids. Retail orders were unavailable for bonds maturing in 2039. The bonds are callable at par in 2024.
The $119.5 million of non-alternative minimum tax residential finance program bonds were priced at par to yield from 1.20% in 2018 to 4.05% in 2034. Retail orders were unavailable for bonds maturing in 2039. The bonds are callable at par in 2024.
The $4.5 million of residential finance program bonds were priced at par to yield from 0.55% in 2016 to 0.95% in 2017. A 2015 maturity will be sold by sealed bid. This series does not have a call option. The deal is rated Aa1 by Moody's and AA-plus by S&P.
The city of Lubbock, Texas, will offer $110.1 million of refunding GOs and tax and waterworks system surplus revenue certifications of obligation bonds. The bonds mature serially from 2014 to 2034. Raymond James is the lead underwriter for the deal. The GOs are rated Aa2 by Moody's and AA-plus by both S&P and Fitch.
Citigroup Global Markets will bring $110 million of revenue bonds to the market Wednesday for the Illinois Health Facilities Authority. The deal is rated Aa2 by Moody's and AA by S&P.
In the competitive market, Acacia Financial Group will bring $225 million of general obligation working cash notes for the Regional Transportation Authority of Illinois on Wednesday. The bonds are rated AA by Fitch.
Municipal bond yields fell slightly on Wednesday morning on the long end with bonds maturing 15-to 22-years falling as much as one basis point, the 23-year by up to two basis points, and maturities from 24-to 30-years dropping by as much as three basis points.
Treasuries strengthened Wednesday morning, with the 30-year yields and 10-year benchmark falling two basis points to 3.48% and 2.70%, respectively. The two-year notes fell five basis points to 0.47%.
