Muni Traders Brace for Big Wave of New Supply

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Municipal bond traders were braced for a large slate of bond issues coming to market on Wednesday, topped by four big competitive sales from Washington state totaling about $945 million.

Washington’s offerings consist of $61 million of Series 2016T GO taxable bonds, $192 million of Series 2016B motor fuel tax GOs, $194 million of Series R-2016A various purpose GO refunding bonds, and $498 million of Series 2015A-1 various purpose GOs.

All of the issues are rated Aa1 by Moody's Investors Service and AA-plus by Standard & Poor’s and Fitch Ratings.

Including this week’s issues, the Evergreen State has sold about $41 billion of debt since 1995, with the biggest offerings coming in 2010 and 2012 when it sold $3.4 billion and $3.5 billion, respectively. The lowest years of issuance were in 1996 and 1998 when the state offered $550 million and $546 million, respectively.

Also on Wednesday, Barclays Capital is expected to price Miami-Dade County Educational Facilities Authority, Fla.'s $650 million of revenue and revenue refunding bonds for the University of Miami. Tentatively, the deal is split into $400 million of tax-exempt and $250 million of taxable, Series 2015A and B.

JPMorgan Securities is slated to price the Greater Orlando Aviation Authority’s $215 million of AMT bonds. The issue is rated Aa2 by Moody’s and AA-minus by S&P and Fitch.

Ramirez is set to price the Massachusetts Bay Transit Authority's $280 million of Series 2015 A and B senior sales tax bonds. The issue is rated Aa2 by Moody’s and AA-plus by S&P.

Since 1995, MBTA has sold about $10.7 billion of debt. The years of 2004 and 2005 saw the highest issuance with $1.6 billion and $1.3 billion, respectively. The MBTA did not come to market at all in 2001, 2011 or 2013.

JPMorgan is expected to price the Board of Regents of the University of North Texas System's $222 million of Series 2015A revenue financing system refunding and improvement bonds and Series 2015B taxable revenue financing system refunding bonds. The bonds are rated Aa2 by Moody's and AA by Fitch.

RBC Capital Markets is set to price for retail investors the state of Connecticut's $840 million of Series 2015A and Series 2015B special tax obligation bonds for transportation infrastructure. The Series 2015B will be refunding bonds. This deal is scheduled to be priced for institutions on Thursday.

On Tuesday, JPMorgan won Collierville, Tenn.’s $111.81 million of general obligation bonds with a true interest cost of 3.38%. The issue was rates triple-A by Moody’s

Secondary Trading

Treasury prices were lower on Wednesday with the yield on the two-year Treasury note rising to 0.66% from 0.64% on Tuesday, while the 10-year yield gained to 2.08% from 2.05% and the 30-year yield increased to 2.89% from 2.86%.

The yield on the 10-year benchmark muni general obligation on Tuesday ended three basis points weaker at 2.03% from 2.06% on Monday, while the yield on the 30-year GO was three basis points weaker at 3.04% from 3.07%, 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 98.2% versus 98.4% on Monday, while the 30-year muni to Treasury ratio stood at 106.2% compared to 107.0%, according to MMD.

MSRB Previous Session's Activity

The Municipal Securities Rulemaking Board reported 37,170 trades on Tuesday on volume of $8.828 billion.

Bond Buyer Visible Supply

The Bond Buyer's 30-day visible supply calendar rose $164.7 million to $13.06 billion on Wednesday. The total is comprised of $4.36 billion competitive sales and $8.70 billion of negotiated deals.

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