A handful of smaller, regional deals priced successfully on Wednesday, as traders waited for the week's headline deal, from the Texas Transportation Commission, to price on Thursday. While most of the week's funds have been saved for the Texas deal, traders still watched Wednesday's primary carefully, hoping that the high-grade deals would indicate what spreads Thursday's $1.2 billion transportation deal might command.
Traders were particularly interested in the triple-A rated City of Chandler, Ariz., general obligation deal that announced final pricing after a repricing on Tuesday, according to data provided by Ipreo. The $214.54 million refunding bond was priced to yield from 0.12% on a 2% coupon to 3% on a 3.5% coupon in 2028, according to Ipreo. Traders said that the deal's narrow spread may be a signal that Thursday's Texas deal will be tight.
"The Chandler deal was high-grade, but small," said a Southwest based trader. "If they can fetch yields like that, then Texas is sure to follow."
Another deal traders said will be a barometer for the Texas Transportation issuance was the triple-A rated $123.1 million sale of Orange County Sanitation District revenue refunding certificates anticipation notes. JPMorgan won the bid for the deal, but no information was available at press time.
"We are very interested in the triple-A credits coming to market this week, their pricing gives directionality to muni scales and market," a trader in the Midwest said.
The Orange County Sanitation bonds have a single maturity in 2016, and received a triple-A rating from both Standard & Poor's and Fitch Ratings.
"Today's triple-A's will be a good predictor of what tomorrow's triple-A will come in at," a trader in New York said.
The Texas Transportation bonds are highway improvement general obligation bonds, and have J.P. Morgan as their lead underwriter.
Other deals to tap the markets today included a Maine Muni Bond Bank offering. Final pricing was announced Wednesday morning after a repricing on Monday, according to information provided by Ipreo.
Tickets for the $109.75 million negotiated deal were executed at 1 p.m. Wednesday. The issue came in two part, $17.455 million of Series 2014B bonds, and $92.295 million of Series 2014C refunding bonds. The Series B bonds were priced to yield a range from 0.20% on a 2% coupon in 2015 to 3.41% on a 3.75% coupon in 2034, according to Ipreo. The Series C bonds were priced to yield a range of 0.20% on a 3% coupon in 2015 through 3.20% on a 3.25% coupon in 2031.
Both series feature an optional call in November 2024 at par and are rated Aa2 by Moody's Investors Services and AA-plus by Standard & Poor's.
The California Municipal Finance Authority also announced final pricing on a $109 million negotiated deal after a repricing on Tuesday, according to Ipreo. The revenue refunding bonds, issued on behalf of the City of Anaheim Electric Utility Distribution System, were priced to yield a range of 0.13% on a 2% coupon in 2015 through 2.50% on a 5% coupon in 2025, according to Ipreo. Both S&P and Fitch Ratings gave the deal a AA-minus.
SECONDARY
The most actively traded bonds in the secondary market included the Massachusetts general obligation consolidated loan 5s of 2041 that traded stronger on Wednesday with the yield dropping two basis points to 3.05% from Tuesday, according to data provided by Markit. Pennsylvania Turnpike Commission subordinate revenue 5s of 2043 also fell by two basis points in yield to 3.82%.
California various purchase GO refunding 5s of 2023's strengthened by three basis points trading at 2.20%, and Chicago O'Hare International Airport revenue refunding general airport third lien 5.25s of 2034 also experienced a yield decline, with its yield decreasing to 4.11%.
Puerto Rico public improvement refundings 5s in 2041 were also among the most actively traded bonds. Yields on the refunding bond rose by five basis points to 7.51%.
YIELDS FALL ON HEELS OF ISM MANUFACTURING REPORT
The ISM Manufacturing Index fell 2.4 points to 56.6, below analysts' predictions that the index would come in at about 58.
The municipal market strengthened after the index number came out, with yields falling to an increasing degree the longer the maturities.
Yields on bonds maturing between 2029 through 2032 showed the most dramatic strength of the day, contracting six basis points, according to the Municipal Market Data triple-A 5% curve provided by TM3. Yields on bonds maturing from 2023 through 2028 and 2033 through 2044 strengthened five basis points. Yields on bonds maturing in 2022 fell three basis points, yields on bonds maturing between 2020 and 2021 strengthened two basis points, while yields on bonds maturing in 2016, 2018 and 2019 all fell one basis point. Yields on bonds maturing in 2017 were unchanged.
The two-year's yield held steady at 0.31%, according to data provided by Municipal Market advisors. The 10-year's declined by two basis points to 2.18%, and the 30-year's by one basis point to 3.31%.
Treasuries strengthened on Wednesday with yields on the two-year note falling by five basis points from market close on Tuesday to 0.53%. The 10-year declined by 12 basis points to 2.40%, and the 30-year by 11 basis points to 3.10%.
