Prices of top-rated municipal bonds were weaker at mid-session, traders said, as yields on some maturities rose by as much as two basis points.
Meanwhile, the market was seeing a second wave of new supply being priced in the primary.
Secondary Market
The yield on the 10-year benchmark muni general obligation was up by as much as two basis points from 2.30% on Tuesday, while the yield on the 30-year GO was up by as much as two basis points from 3.28%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were mixed on Wednesday as the yield on the two-year Treasury note declined to 0.59% from 0.60% on Tuesday, while the 10-year yield decreased to 2.26% from 2.27% and the 30-year yield increased to 3.06% from 3.04%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 101.8% versus 102.5% on Monday, while the 30-year muni to Treasury ratio stood at 108.0% compared to 109.5%, according to MMD.
Primary Market
Topping the calendar was a large revenue bond issue from Florida's Citizens Property Insurance Corp. The deal is structured as fixed-rate bonds and floating rate notes.
The $700 million of Series 2015A-1 senior secured bonds were priced to yield from 1.61% with 3% and 5% coupons in a 2018 split maturity; to 2.15% with 4% and 5% coupons in a split 2020 maturity; 2.66% with 4% and 5% coupons in a split 2022 maturity; and as 5s to yield 3.20% in 2025. Pricing information on the floating-rate notes was not available.
Proceeds from the tax-exempt paper will provide Citizens' coastal account with liquidity, or a cash bridge, should funds be needed to pay claims quickly if Florida is hit by a hurricane during the upcoming June 1 through Nov. 30 storm season. Otherwise, bond proceeds will be invested.
The issue is rated A1 by Moody's Investors Service, A-plus by Standard & Poor's and AA-minus by Fitch Ratings; all three rating agencies assign a stable outlook to the bonds.
Since 2004, Citizens has sold about $12 billion of bonds, with the most issuance coming in 2006 and 2007 when they offered $3.05 billion and $2.01 billion, respectively. Citizens did not sell any bonds in 2005, 2013 or 2014.
Meanwhile, the state-run, nonprofit Florida Hurricane Catastrophe Fund, which also offers low-cost reinsurance to private companies, will be issuing $1.2 billion of taxable bonds for liquidity needs in the next few weeks.
Bank of America Merrill Lynch priced North Carolina's $265.19 of Series 2015 grant anticipation revenue vehicle bonds. The issue was priced as 5s to yield 0.30% in 2016 and to yield from 1.96% with a 5% coupon in 2020 to 3.65% with a 5% coupon in 2030. The GARVEEs are rated A2 by Moody's, AA by S&P and A-plus by Fitch.
In the competitive sector, Springfield, Mo., sold $523.77 million of Series 2015 public utility refunding revenue bonds. Bank of America Merrill Lynch won the issue with a true interest cost of 3.38%. The bonds were priced to yield from 0.15% with a 5% coupon in 2015 to 3.85% with a 4% coupon in 2036. The bonds are rated AA-plus by S&P and AA by Moody's.
The last time Springfield was in the competitive market was on Sept. 14, 2006, when it sold $615 million of Series 2006 public utility revenue bonds to UBS Securities with a TIC of 4.54%.
Seattle, Wash., sold $229.15 million of Series 2015 water system improvement and refunding revenue bonds. Barclays Capital won the issue with a true interest cost of 3.19%. The bonds were priced to yield from 0.13% with a 2% coupon in 2015 to 3.91% with a 4% coupon in 2038; a 2045 term was priced as 4s to yield 4.03%. The issue is rated Aa1 by Moody's and AA-plus by S&P.
The last time the city sold bonds competitively was on May 15, 2012, when Citi won $238.77 million of Series 2012 water system refunding revenue bonds with a TIC of 2.62%.
The Santa Clara Finance Authority, Calif., sold $103.37 million of Series 2015P refunding lease revenue bonds for multiple facilities projects. Barclays won the issue with a TIC of 3.14%. The bonds were priced as 5s to yield from 0.82%in 2017 to 3.33% in 2031. The issue is rated AA-plus by S&P and AA by Fitch.
The last time the authority competitively sold bonds was on April 8, 2014, when Morgan Stanley won $11.72 million of Series 2014 O refunding lease revenue bonds for multiples facilities projects with a TIC of 1.92%.
Nassau County, N.Y., sold $168.90 million of Series 2015 B general improvement bonds. JPMorgan won the bonds with a TIC of 3.78%. No pricing information was immediately available. The issue is rated A1 by Moody's, A-plus by S&P and A by Fitch.
The last time the county sold bonds competitively was on Jan. 21 when FTN Financial Capital Markets won $29.64 million of Series 2015A general improvement bonds with a TIC of 2.99%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $2.11 billion to $13.83 billion on Wednesday. The total is comprised of $6.05 billion competitive sales and $7.78 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 44,874 trades on Tuesday on volume of $8.644 billion. The most active bond, based on the number of trades, was the Pennsylvania Turnpike Commission's Series A of 2015 Series A-1 fixed-rate turnpike revenue bonds 4s of 2035, which traded 236 times at an average price of 99.982 with an average yield of 3.982%. The bonds were initially priced at 98.622% to yield 4.10%.
Shelly Sigo contributed to this report
