Prices of top-quality municipal bonds were weaker at mid-session, traders said, with yields on some maturities strengthening by as much as three basis points.
In the primary, Wisconsin sold $391 million of bonds in the competitive arena while a retail pricing was released on the $1 billion issue from the Dormitory Authority of the State of New York.
Secondary Market
The yield on the 10-year benchmark muni general obligation on Tuesday was one to three basis points stronger from 2.16% on Monday, while the yield on the 30-year GO was as much as three basis points stronger from 3.10%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were mixed on Tuesday, with the yield on the two-year Treasury note slipping to 0.72% from 0.73% on Monday, while the 10-year yield fell to 2.18% from 2.19% and the 30-year yield increased to 2.94% from 2.92%.
The 10-year muni to Treasury ratio was calculated on Monday at 98.2% versus 98.7% on Friday, while the 30-year muni to Treasury ratio stood at 105.4% compared to 106.5%, according to MMD.
Primary Market
In the competitive arena, the state of Wisconsin sold $391.33 million of Series 2015C general obligation bonds.
Bank of America Merrill Lynch won the issue with a true interest cost of 3.32%. The issue was priced to yield from 0.59% with a 5% coupon in 2017 to 3.06% with a 5% coupon in 2036.
Standard & Poor's, Fitch Ratings, and the Kroll Bond Rating Agency all affirmed their AA ratings on Wisconsin on Friday; Moody's Investors Service affirmed its Aa2 rating. Moody's has a positive outlook; the others assign a stable outlook.
The bonds offer an eight-year call instead of the traditional 10-year provision. Wisconsin has been using the eight-year call on recent sales due to market reception, Capital Finance Director David Erdman said last week.
Since 1995, Wisconsin has issued roughly $16.29 billion of general obligation debt. The highest issuance years occurred in 2008 and 2011, when it issued $1.38 billion and $1.49 billion, respectively. The years of 1997 and 1999 saw the lowest issuance with $236 million and $368 million, respectively.
Looking ahead, Wisconsin expects to name a financial advisor and bond counsel for an upcoming public financing for a piece of a new $500 million arena for the National Basketball Association's Milwaukee Bucks.
Wisconsin was accepting qualifications from investment banking firms as the state works to accommodate the team's efforts to break ground this fall, according to Erdman.
JPMorgan Securities priced DASNY's $1.1 billion of Series 2015E general purpose state personal income tax revenue bonds for retail investors ahead of the institutional pricing on Wednesday.
The issue was priced to yield from 0.90% with 2%, 4% and 5% coupons in a triple-split 2018 maturity to 3.70% with a 3.50% coupon in 2037. A 2017 maturity was offered as a sealed bid; the 2027-2028, 2030-2035 and 2036 maturities were not offered to retail investors.
The DASNY deal was rated Aa1 by Moody's and triple-A by S&P; the credit carries a stable outlook from both rating agencies.
The proceeds are expected to be used to refund certain outstanding bonds issued under various programs, DASNY said, which may include bonds under the personal income tax revenue bond program issued by the Dormitory Authority and the Environmental Facilities Corp., the CUNY program, and the upstate community college program. The bonds will be issued under the personal income tax general purpose resolution.
"The market has been very volatile this week, but given the strength and familiarity of the personal income tax program we are optimistic that the sale will go well," a spokesperson for DASNY said last week.
"We expect this deal to do quite well, as demand for New York paper remains strong," said Michael Pietronico, CEO of Miller Tabak Asset Management.
On Wednesday, Barclays Capital is set to price the Lower Colorado River Authority, Texas' $135 million of Series 2015D refunding revenue bonds. The issue is rated A by S&P and Fitch Ratings.
City Securities is slated to price Valparaiso, Ind.'s $143 million multi-school building construction first mortgage bonds on Wednesday. The issue is expected to be rated AA-plus by S&P.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 35,280 trades on Monday on volume of $5.315 billion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $336.4 million to $7.19 billion on Tuesday. The total is comprised of $2.86 billion competitive sales and $4.32 billion of negotiated deals.
Yvette Shields contributed to this report
