The market saw a flurry of new deals Wednesday, with California's $1.9 billion GOs leading the way for negotiated deals. Maryland's combined $822.7 million was the biggest competitive transaction.
Prices of top-rated municipal bonds on were mixed at market close on Wednesday, according to traders.
"The market is sliding sideways today," a west coast trader said. The day's deals "were all nicely priced compared to the secondary market," he added.
Primary Market
Bank of America Merrill Lynch and Morgan Stanley priced and then re-priced California's $1.9 billion general obligation bonds for institutions. The $931.61 million general obligation new money part is priced to yield from 0.17% with a 4% coupon in 2016 to 3.68% with a 4% coupon and 3.27% as 5s in a split maturity in 2045.
The $998.005 million refunding part of the deal is priced to yield from 0.17% in a split maturity in 2016, 2% and 3% coupons, to 2.90% as 5s in 2030. The deal is rated Aa3 by Moody's Investors Service and A-plus by both Standard and Poor's and Fitch Ratings.
"It's too early to say, but judging by the fact they were able to mark the longest maturity from 3.28 to 3.27, that would indicate to me they have more orders than dogs available," said the west coast trader.
The trader also noticed from the original pricing to the re-pricing, the 2023 maturity was moved from the GO new money portion of the deal.
"They must have moved it into the 2026 maturity, as originally that maturity was for $46.670 million and now it's at $246 million. The 2024 maturity also got increased from the preliminary pricing, it looks like they shifted the structure to fill demand," the trader said.
Maryland auctioned two issues totaling $822.7 million.
Bank of America Merrill Lynch won the larger issue of $518 million of tax-exempt First Series A State and Local Facilities Loan of 2015 GOs with a true interest cost of 2.646%. It is priced to yield 0.90% in 2018 with a 5% coupon to 2.89% with a 4% coupon in 2029. The 2030 maturity is priced at 98.50, with a 3% coupon.
Citi won the second issue of $364.695 million of tax exempt refunding First Series B State and Local Facilities Loan of 2015 GO with a true interest cost of 2.1433%.it is priced to yield from 1.40% with a 4% coupon in 2020 to 2.40% as 4s in 2026.
Both issues are rated triple-A by Moody's, S&P and Fitch.
Wells Fargo priced $344.64 million for Arizona State University in two series. Series 2015A, $181.775 million of system revenue and refunding green bonds, is priced to yield from 1.32% with a 2% coupon in 2019 to 3.35% as 5s in 2046. The 2015 maturity was offered as a sealed bid.
The second series is $162.865 million of system revenue and refunding bonds, Series 2015B is priced to yield from 0.40% as 3s in 2016 to 3.35% as 5s in 2046. The 2015 maturity was offered as a sealed bid. The deal is rated Aa3 by Moody's and triple-A by S&P.
Wells Fargo priced the University of Virginia's $185.110 million of general revenue pledge refunding bonds in two series.
The $87.215 million Series 2015 A-1 is priced as 4s to yield 3.43% in 2045. The $97.895 million Series 2015 A-2 green bonds are priced with a split maturity in 2045, with $30 million priced at par with a 3.625% coupon and $67.895 million priced as 5s to yield 3.02%. The deal is rated triple-A by both Moody's and S&P and has an expected triple-A rating from Fitch as well.
Wells Fargo earned a hat trick, with a third large deal: Indiana University's $141.970 million of consolidated revenue bonds, priced to yield 0.30% with a 3% coupon in 2016 to 3.55% as 4s in 2042.This deal has a triple-A rating from Moody's and an expected AA-plus from S&P.
Secondary Market
The yield on the 10-year benchmark muni general obligation on Wednesday was unchanged from Tuesday's 2.08%, while the yield on the 30-year GO also decreased by one basis point to 2.92% from 2.93%, according to the final read of Municipal Market Data's triple-A scale.
Treasury prices were mixed, as the yield on the two-year Treasury note was unchanged from 0.66% on Tuesday while the 10-year yield dropped to 2.11% from 2.12% and the 30-year yield rose to 2.72% from 2.71%.
The 10-year muni to Treasury ratio was calculated at 98.2% on Wednesday versus 97.9% on Tuesday, while the 30-year muni to Treasury ratio stood at 107.4% compared to 107.9%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $3.666 million to $9.020 billion on Wednesday. The total is comprised of $2.995 billion competitive sales and $6.025 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 41,024 trades on Tuesday on volume of $7.165 billion.
Most active on Tuesday, based on the number of trades, was the city of Chicago general obligation bonds, refunding Series 2012C 5s of 2023, which traded 179 times at an average price of 107.027, with an average yield of 3.819%.
