Prices of top-shelf municipal bonds were stronger at mid-session, according to traders, with yields on some maturities weakening by as much as one basis point.
The week’s primary action kicked off with three competitive sales from the Dormitory Authority of the State of New York totaling about $940 million.
Secondary Trading
The yield on the 10-year benchmark muni general obligation was as much as one basis point weaker from 2.05% on Friday, while the yield on the 30-year GO was as much as one basis point weaker from 3.10%, according to a read of the Municipal Market Data's triple-A scale.
Treasury prices were higher, with the yield on the two-year Treasury falling to 0.62% from 0.64% from Friday, while the 10-year yield fell to 2.06% from 2.10% and the 30-year yield decreased to 2.90% from 2.93%.
The 10-year muni to Treasury ratio was calculated on Friday at 97.8% versus 97.0% on Thursday, while the 30-year muni to Treasury ratio stood at 105.9% compared to 105.1%, according to MMD.
Primary Market
DASNY sold $939.49 million of state sales tax revenue bonds in three separate sales.
Morgan Stanley won the $495.41 million of Series 2015B Group B bonds with a true interest cost of 3.35%. Pricing information was not immediately available.
Wells Fargo Securities won the $291.97 million of Group A bonds with a TIC of 1.63%.
The $152.11 million of Group C bonds was selling at press time.
With the short week, most of the action is jammed into Wednesday and Thursday.
On Wednesday, Piper Jaffray is set to price the Texas Public Finance Authority’s $370 million of GO and refunding taxable bonds. The deal is expected to mature serially from 2016 to 2035 and is rated triple-A by Moody’s Investors Service and Standard & Poor’s.
The largest deal of the week is coming from the Long Island Power Authority, which is slated to sell $1 billion in restructuring bonds through its Utility Debt Securitization Authority. Bank of America Merrill Lynch will be the lead manager on the deal, which is scheduled to have a retail order period on Wednesday followed by the institutional pricing on Thursday. The deal is rated triple-A by Moody’s, S&P and Fitch.
BAML is also expected to price Hawaii’s $747 million of Series 2015 GO, Series ET, EU, EV, EW, EX, EY, EZ and FA; the EU series are green bonds. A retail order period will take place on Wednesday, with the institutional pricing set for Thursday. The deal is rated triple-A by Moody’s and AA by Fitch Ratings.
Previous Week's Most Actively Traded Issues
Revenue bonds comprised 57.34% of new issuance in the week ended Oct. 9 up from 56.13% in the previous week, according to Markit. General obligation bonds comprised 34.48% of total issuance, down from 36.05%, while taxable bonds made up 8.18%, up from 7.82%
Some of the most actively traded issues in the week were in Colorado, California and Washington.
In the revenue bond sector, the Colorado Health Facility Authority 4s of 2045 were traded 97 times. In the GO bond sector, California 5s of 2045 were traded 32 times. And in the taxable bond sector, the Grant County, Wash., Public Utility District No. 2’s Priest Rapids Hydro Electric 4.584s of 2040 were traded 17 times, Markit said.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 2,846 trades on Monday on volume of $115 million.
