Prices of top-rated municipal bonds were lower at mid-session, traders said, as yields rose for the third straight trading session.
In the primary, the city of Chicago, the Dormitory Authority of the State of New York and the Maryland Department of Transportation were all in the market, providing a variety of names and credit quality for investors.
Secondary Market
The yield on the 10-year benchmark muni general obligation rose two to four basis points from 2.27% on Tuesday, while the yield on the 30-year GO was up two to four basis points from 3.24%, according to a read of Municipal Market Data's triple-A scale. Yields on some intermediate maturities were up three to five basis points.
Treasury prices were lower on Wednesday as the yield on the two-year Treasury note increased to 0.67% from 0.65% on Tuesday, while the 10-year yield rose to 2.33% from 2.27% and the 30-year yield gained to 3.08% from 3.03%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 100.3% versus 101.4% on Monday, while the 30-year muni to Treasury ratio stood at 107.3% compared to 108.2%, according to MMD.
Primary Market
Chicago made its return to the market on Wednesday after converting $800 million of floating-rate GOs to a fixed-rate in last week's sale of $670 million of general obligation bonds.
In this sale, the city was converting floating-rate sales tax-backed bonds sold in 2002 to fixed-rates. RBC Capital Markets was the senior manager on the remarketing with another 12 firms in the syndicate; Sycamore Advisors was advising the city.
RBC priced the $111.72 million of Series 2002 sales tax revenue refunding bonds to yield from 1.68% with a 2% coupon in 2017 to 4.67% with a 5% coupon in 2034; a 2016 maturity was offered as a sealed bid. The longest maturity, which comes due in 2034, was priced at about 170 basis points over the comparable MMD triple-A benchmark.
Chicago recently posted an investor presentation with its offering statement and held investor calls promoting strong coverage and bondholder protections on the sales tax credit. The issue was rated triple-A by Standard & Poor's, BBB-plus by Fitch Ratings and AA-plus by Kroll Bond Rating Agency.
"I like this deal better than the deal last week," said a Midwest trader, referring to the 170 basis points over the triple-A scale. "I hope this proves to be one of the cheaper deals you can buy in Chicago."
Citi priced DASNY's $503.98 million of Series 2015A bonds for the North Shore Long Island Jewish Health System.
The bonds were priced to yield from 0.91% with 3% and 5% coupons in a split 2017 maturity to 3.99% with a 5% coupon in 2037; a 2042 term bond was priced as 4 1/8s to yield 4.34% and a 2043 term was priced as 5s to yield 4.10%; a 2016 maturity was offered as a sealed bid. The issue is rated A3 by Moody's Investors Service, A-minus by S&P and A by Fitch.
DASNY said proceeds from the sale will be used to finance the construction, renovation and modernization of the Emergency Departments at both the Huntington and Southside Hospitals and to refund all or part of the North Shore Long Island Jewish Obligated Group's revenue bonds, Series 2003, 2005 A&B, 2007A, and 2009A .
In the competitive sector, the Maryland DOT sold two separate bond issues totaling $408.45 million.
Bank of America Merrill Lynch won the $272.45 million of refunding Series 2015 consolidated transportation bonds with a true interest cost of 1.84%. The issue was priced as 5s to yield from 0.32% in 2016 to 2.14% in 2023.
Morgan Stanley won the $136 million of Series 2015 second issue consolidated transportation bonds with a TIC of 2.75%. Pricing information was not immediately available.
Both issues are rated Aa1 by Moody's, triple-A by S&P and AA-plus by Fitch.
Maryland DOT last sold bonds competitively on Feb. 11 when Citi won $265.54 million of Series 2015 consolidated transportation bonds with a TIC of 2.56%.
In the short-term sector, Bank of America Merrill Lynch received the official award on Los Angeles County's $900 million of 2015-16 tax and revenue anticipation notes. The RANs were priced as 5s to yield 0.29% in 2016. The issue is rated MIG1 by Moody's, SP1-plus by S&P and F1-plus by Fitch.
On Thursday, the District of Columbia will be offering $534.44 million of GOs, which are being priced by Citi.
The deal consists of $500 million of Series 2015A new money bonds and $34.44 million Series 2015B refunding bonds. The issue is rated Aa1 by Moody's and AA by S&P and Fitch.
Since 1996, Washington, D.C., has issued about $9 billion of GOs, with the most issuance occurring in 2007 and 2008 when it offered $1.3 billion and $1 billion, respectively; D.C. sold no bonds in 2006 or 2009.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 48,415 trades on Tuesday on volume of $10.708 billion.
The most active bond, based on the number of trades, was the Eastern Illinois University's taxable Build America Bonds with a direct subsidy to issuer's certificates of participation Series 2009A 6.20s of 2029, which traded 282 times at an average price of 92.015 with an average yield of 7.116%. The bonds were initially priced at par to yield 6.20%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $653.6 million to $13.85 billion on Tuesday. The total is comprised of $5.44 billion competitive sales and $8.41 billion of negotiated deals.
Yvette Shields contributed to this report.
