The city of Chicago makes its return to the market on Wednesday in the next stage of its effort to shed billions of dollars of bank credit risk.
Meanwhile, traders will be eying yields, which have risen by eight basis points in the last two sessions.
Secondary Market
Treasury prices were lower on Wednesday as the yield on the two-year Treasury note increased to 0.66% from 0.65% on Tuesday, while the 10-year yield rose to 2.31% from 2.27% and the 30-year yield increased to 3.07% from 3.03%.
On Tuesday, the yield on the 10-year benchmark muni general obligation rose by five basis points to 2.27% from 2.22% on Monday, while the yield on the 30-year GO increased five basis points to 3.24% from 3.19%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated on Tuesday at 100.3% versus 101.4% on Monday, while the 30-year muni to Treasury ratio stood at 107.3% compared to 108.2%, according to MMD.
Primary Market
The city of Chicago makes its return to the market on Wednesday after converting $800 million of floating-rate GOs to a fixed-rate and shedding swaps in last week's sale of $670 million of general obligation bonds.
The city is now planning to convert $112 million of floating-rate sales tax-backed bonds sold in 2002 to fixed-rate sales tax bonds and take out more swaps.
RBC Capital Markets is the senior manager with another 12 firms in the syndicate; Sycamore Advisors is advising the city.
Chicago recently posted an investor presentation with its offering statement and held investor calls promoting strong coverage and bondholder protections on the sales tax credit, which is rated triple-A by Standard & Poor's.
Elsewhere in the negotiated sector on Wednesday, Citi is expected to price the New York State Dormitory Authority's $500 million of bonds for the North Shore Long Island Jewish Health System. The DASNY issue is rated A3 by Moody's Investors Service, A-minus by S&P and A by Fitch Ratings.
According to DASNY, the proceeds of the sale are to be used to finance the construction, renovation and modernization of the Emergency Departments at both Huntington Hospital and Southside Hospital and to refund all or part of the North Shore Long Island Jewish Obligated Group's revenue bonds, Series 2003, Series 2005 A&B, Series 2007A, and Series 2009A .
In the competitive sector, the Maryland Department of Transportation is selling two separate bond issues totaling $488 million. The sales consist of $337.51 million of refunding Series 2015 consolidated transportation bonds and $150 million of Series 2015 second issue consolidated transportation bonds. Both issues are rated Aa1 by Moody's, triple-A by S&P and AA-plus by Fitch.
Barclays Capital is slated to price Franklin County, Ohio's $281.59 million of Series 2015 hospital facilities revenue bonds for the Ohio Health Corp. The bonds are rated Aa2 by Moody's, AA-plus by S&P and AA by Fitch.
On Thursday, the District of Columbia will be offering $534.44 million of GOs, which are being priced by Citi.
The deal consists of $500 million of Series 2015A new money bonds and $34.44 million Series 2015B refunding bonds. The issue is rated Aa1 by Moody's and AA by S&P and Fitch.
Since 1996, Washington, D.C., has issued about $9 billion of GOs, with the most issuance occurring in 2007 and 2008 when it offered $1.3 billion and $1 billion, respectively; D.C. sold no bonds in 2006 or 2009.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 48,415 trades on Tuesday on volume of $10.708 billion.
The most active bond, based on the number of trades, was the Eastern Illinois University's taxable Build America Bonds with a direct subsidy to issuer's certificates of participation Series 2009A 6.20s of 2029, which traded 282 times at an average price of 92.015 with an average yield of 7.116%. The bonds were initially priced at par to yield 6.20%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $653.6 million to $13.85 billion on Tuesday. The total is comprised of $5.44 billion competitive sales and $8.41 billion of negotiated deals.
Yvette Shields contributed to this report
