Prices of top-rated municipal bonds were stronger at mid-session, traders said, with yields on some maturities down by more than two basis points after remaining flat for the previous two trading sessions.
Meanwhile, the $1.7 billion California tobacco bond deal was priced for institutions on Wednesday after a one-day order period.
Secondary Market
The yield on the 10-year benchmark muni general obligation was down as much as two basis points from 1.94% on Tuesday, while the yield on 30-year GO was up as much as two basis points from 2.76%, according to the final read of Municipal Market Data's triple-A scale. On Tuesday, top-quality munis closed steady for the second day in a row.
Treasury prices were lower on Wednesday. The yield on the two-year Treasury note rose to 0.58% from 0.56% on Tuesday, while the 10-year yield increased to 1.89% from 1.87% and the 30-year yield rose to 2.47% from 2.46%.
On Tuesday, the 10-year muni to Treasury ratio was calculated at 103.4% versus 101.3% on Monday, while the 30-year muni to Treasury ratio stood at 112.1% compared to 110.0%.
Primary Market
Citigroup Global Markets priced the California's Golden State Tobacco Securitization Corp.'s $1.697 billion of Series 2015A enhanced tobacco settlement asset-backed bonds for institutions.
The deal was priced to yield from 0.67% with a 3% coupon in 2017 to 1.92% with a 5% coupon in 2022; as 5s to yield 2.48% in 2026; as 4s to yield 3.45% in 2031; as 3 1/4s to yield 3.56% and as 5s to yield 3.16% in a split 2032 maturity; as 5s to yield 3.20% in 2033; as 3 1/4s to yield 3.64% and as 5s to yield 3.27% in a split 2035 maturity; as 5s to yield 3.35% in 2040; and as 5s to yield 3.40% and as 4s to yield 3.80% in a split 2045 maturity. The 2016 maturity was offered as a sealed bid.
On Tuesday, Citi priced the issue was for retail to yield from 0.72% with a 3% coupon in 2017 to 2.02% with a 5% coupon in 2022; as 5s to yield 2.55% in 2026; as 4s to yield 4.38% in 2031; as 3 1/2s to yield 3.60 and as 5s to yield 3.16% in a split 2032 maturity; as 4s to yield 3.67 and as 5s to yield 3.27% in a split 2035 maturity; and as 5s to yield 3.40 and as 4s to yield 3.80% in a split 2045 maturity. No retail orders were taken in the 2033, 2034 or 2040 maturities. The 2016 maturity was offered as a sealed bid.
The asset-backed securities are rated A1 by Moody's Investors Service and A by Standard & Poor's and Fitch Ratings.
Also on Wednesday, Anne Arundel County, Md., sold two separate competitive deals totaling $383.70 million.
The larger sale - $269 million of general obligation bonds was won by Bank of America Merrill Lynch with a true interest cost of 2.8327%. This sale was broken down into two parts The $191.40 million of GO consolidated general improvement bonds were priced as 5s to yield 0.20% in 2016 to 2.70% in 2035. The $77.60 million of GO consolidated water and sewer bonds were priced as 5s to yield 0.20% in 2016 to 2.70% in 2035; a 2040 term bond was priced as 5s to yield 2.78% and a 2045 term was priced as 5s to yield 2.81%.
The smaller sale - $114.70 million of GOs was also won by BAML with a TIC of 2.3044%. This sale was broken down into three parts. The $62.80 million of GO consolidated general improvement bonds were priced as 5s to yield 0.24% in 2016 to 2.25% in 2027. The $35.76 million of GO consolidated water and sewer refunding bonds were priced as 5s to yield 0.29% in 2016 to 2.73% in 2036. The $16.14 million of GO consolidated golf course project refunding bonds were priced as 5s to yield 0.29% in 2016 to 2.37% in 2028.
Both sales are rated Aa1 by Moody's, triple-A by S&P and AA-plus by Fitch.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $710.6 million to $12.125 billion on Wednesday. The total is comprised of $3.238 billion competitive sales and $8.887 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 39,018 trades on Tuesday on volume of $8.447 billion.
Most active on Monday, based on the number of trades, was the Kentucky Municipal Power Agency's Series 2015A Prairie State project power system revenue refunding 4s of 2029, which traded 164 times at an average price of 99.898 with an average yield of 3.989%; (initial offering price of 97.858, an initial offering yield of 4.14%).
