Munis End Flat as New Supply Hits Market

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Top-rated municipal bonds finished unchanged, traders said, as the first of the week's $8.84 billion of bond supply hit the market on Tuesday.

The yield on the 10-year benchmark muni general obligation was unchanged from 1.40% on Monday, while the yield on the 30-year muni was steady at 2.11%, according to the final read of Municipal Market Data's triple-A scale.

U.S. Treasuries were narrowly mixed on Tuesday. The yield on the two-year Treasury rose to 0.75% from 0.74% on Monday, the 10-year Treasury yield gained to 1.55% from 1.54% and the yield on the 30-year Treasury bond was flat at 2.23%.

The 10-year muni to Treasury ratio was calculated at 90.3% on Tuesday compared to 91.1% on Monday, while the 30-year muni to Treasury ratio stood at 94.6% versus 94.4%, according to MMD.

 

Primary Market

Bank of America Merrill Lynch priced and repriced the California Health Facilities Financing Authority's $446.61 million of Series 2016A revenue bonds for Providence St. Joseph Health on Tuesday.

The issue was repriced to yield from 0.99% with a 5% coupon in 2022 to 2.56% with a 4% coupon in 2036; a 2041 maturity was priced as 3s to yield 3.06% and a split 2047 maturity was priced as 3s to yield 3.08% and as 4s to yield 2.72%.

The deal is rated Aa3 by Moody's Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings. It carries stable outlooks from all three agencies.

On Thursday, Ziegler is expected to price the California HFFA's $271 million of refunding revenue bonds for the Adventist Health System/West. That deal is rated A by Fitch.

Since 2006, the HFFA has sold about $17 billion of debt with the largest issuance occurring in 2009 when it sold about $2.33 billion of bonds. The authority sold the least amount of debt in 2014 when it issued nearly $500 million of bonds.

Citigroup priced and repriced the Judson Independent School District, Texas' $310.92 million of Series 2016 unlimited tax school building and refunding bonds.

The issue was repriced to yield from 0.61% with a 3% coupon in 2018 to 2.49% with a 4% coupon in 2036; a 2041 maturity was priced as 4s to yield 2.57% and a 2045 maturity was priced as 4s to yield 2.61%.

The deal is backed by the Permanent School Fund guarantee program and rated triple-A by Moody's and Fitch.

Goldman Sachs priced the Illinois Municipal Power Agency's $260.6 million of Series 2016A power project revenue bonds for the Prairie State Project.

The issue was priced to yield from 0.89% with a 5% coupon in 2018 to 2.97% with a 4% coupon in 2036; a split 2041 maturity was priced as 4s to yield 3.04% and as 5s to yield 2.72%.

The deal is rated A2 by Moody's and A-minus by S&P.

Morgan Stanley priced the New Jersey Educational Facilities Authority's $105.33 million of Series 2016G taxable revenue refunding bonds for the College of New Jersey.

The issue was priced at par to yield from 1.866% in 2020 to 3.459% in 2032 and 3.64% in 2034.

The deal is rated A2 by Moody's, A by S&P and AA-minus by Fitch.

Wells Fargo Securities received the official award on the Deschutes County, Ore., Hospital Facilities Authority's $108.3 million of tax-exempt and taxable hospital revenue bonds for the St. Charles Health System.

The $101.27 million of tax-exempts were priced to yield from 0.58% with a 3% coupon in 2017 to 2.81% with a 4% coupon and 2.56% with a 5% coupon in a split 2035 maturity. A 2045 maturity was priced as 3 1/4s to yield 3.26%, a 2046 maturity was priced as 4s to yield 3.01% and a 2048 maturity was priced as 5s to yield 2.67%.

The $7.04 million of taxables were priced at par to yield from 1.375% in 2017 to 2.74% in 2023.

The deal is rated A2 by Moody's and A-plus by S&P.

Competitive sales dominate this week's calendar, but are packed into the two-day timeframe of Wednesday and Thursday.

Topping the competitive calendar is the state of Massachusetts, which is coming to market with over $2 billion of bonds and notes.

The Bay State will competitively sell $1.5 billion of revenue anticipation notes in three separate offerings on Wednesday and about $835 million of general obligation bonds on Thursday in two separate sales.

The note deals are rated MIG1 by Moody's, SP1-plus by S&P and F1-plus by Fitch while the bond deals are rated Aa1 by Moody's and AA-plus by S&P and Fitch.

Portland, Ore., will competitively sell $321 million of first and second lien sewer system revenue refunding bonds in two separate sales on Wednesday. The first lien bonds are rated Aa2 by Moody's and AA by S&P while the second lien bonds are rated Aa3 by Moody's and AA-minus by S&P.

JPMorgan Securities is expected to price the Maryland Department of Housing and Community Development's Community Development Administration's $328.29 million of Series 2016A taxable residential revenue bonds on Wednesday. The deal is rated Aa2 by Moody's and AA by Fitch.

Siebert Branford Shank is set to price Dallas County, Texas' $170 million of Series 2016 combination tax and parking garage certificates of obligation on Wednesday. The deal is rated triple-A by Moody's and S&P.

Bank of America Merrill Lynch is expected to price the Eastern Muni Water District, Calif.'s $131.52 million of water and wastewater revenue bonds on Wednesday. The deal is rated AA by S&P and AA-plus by Fitch.

Goldman Sachs is set to price the Illinois Finance Agency's $115.92 million of Series 2016A revenue refunding bonds for DePaul University. The deal is rated Aa2 by Moody's and A by S&P and Fitch.

Citigroup is expected to price the Florida Housing Corp.'s $100 million of taxable homeowner mortgage revenue bonds on Wednesday.

 

MSRB: Previous Session's Activity

The Municipal Securities Rulemaking Board reported 30,517 trades on Monday on volume of $8.11 billion.

The MSRB secondary volume was in line with a typical Monday pace ahead of a busy new issue week, Janney Municipal Strategist Alan Schankel wrote in a Tuesday market comment.

"Both this morning's milder, pleasant weather and the strong August new issue pace belie the summer doldrums scenario often seen in the two-week run-up to Labor Day," Schankel wrote. "We estimate this month's total primary supply will exceed $44 billion, making it the most active August in at least 30 years based on Bond Buyer data."

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