Municipal bonds closed out the session unchanged on Tuesday, traders said, as the rest of the week's paltry new issue supply came to market.
Secondary Trading
The yield on the 10-year benchmark muni general obligation closed unchanged on Tuesday from 2.28% on Monday, while the yield on the 30-year GO was flat from 3.28% according to the final read of Municipal Market Data's triple-A scale.
Trading was light in the secondary market as traders kept watch on yields, which had fallen by as much as six basis points on Monday in the wake of financial turmoil in Puerto Rico and Greece.
Treasury prices were mixed on Tuesday with the yield on the two-year Treasury note unchanged from 0.64% on Monday, while the 10-year yield dropped to 2.32% from 2.34% and the 30-year yield decreased to 3.09% from 3.10%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 97.6% versus 98.3% on Monday, while the 30-year muni to Treasury ratio stood at 105.6% compared to 106.1%, according to MMD.
Puerto Rico GOs Continued to Drop
Prices of Puerto Rico debt continued to drop on Tuesday, albeit at a slower downward pace, the second day in a row the bonds traded lower.
Puerto Rico bonds fell on Monday after a published report quoted Gov. Alejandro García Padilla as saying the commonwealth cannot pay its $72 billion in debt.
Among actively traded bonds on Tuesday, the Puerto Rico commonwealth Series 2014A general obligation 8s of 2035 were trading as low as 64 cents on the dollar, according to the Municipal Securities Rulemaking Board's EMMA website, a high yield of 13.13%. There were 82 trades totaling $190 million.
On Monday, the GOs traded as low as 68.30 cents on the dollar, according to EMMA, a high yield of 12.291%. There were 93 trades totaling $141 million.
On Friday, the GOs traded as low as 76.75, according to EMMA, a high yield of 10.874%. There were 19 trades totaling $22 million.
Separately, the commonwealth Series 2012A GO improvement 5s of 2041 were trading as low as 51.625 cents on the dollar on Tuesday, according to EMMA, a high yield of 10.434%. There were 85 trades totaling $43 million.
On Monday, the bonds traded at a low price of 51.716, a high yield of 10.416%, according to EMMA, while the bonds traded on Monday at a low price 63.033, a high yield of 8.571%.
Primary Market
Morgan Stanley priced the Metropolitan Washington Airports Authority's $345.96 million of Series 2015 B, C and D airport system revenue and refunding bonds.
The $279.27 million of Series 2015B AMT bonds were priced to yield from 0.45% with a 1% coupon in 2015 to 3.79% and 3.61% with 5% coupons in a split 2035 maturity. A 2040 term bond was priced as 5s to yield 3.95% and a 2045 term was priced as 5s to yield 4.03%.
The $36.2 million Series 2015C non-AMT bonds were priced to yield from 0.35% with a 1% coupon in 2015 to 3.51% with a 5% coupon in 2035.
The $30.49 million of Series 2015D taxable bonds were priced at par to yield from 2.70% in 202 to 4.963% in 2035.
The issue was rated A1 by Moody's Investors Service and AA-minus by Standard & Poor's and Fitch Ratings.
Morgan Stanley also priced Arizona's $166.76 million of Series 2015 refunding certificates of participation.
The COPs were priced to yield from 0.97% with a 4% coupon in 2017 to 3.20% with a 5% coupon in 2027; the 2015 and 2016 maturities were offered as sealed bids. The COPs were rated Aa3 by Moody's and AA-minus by S&P.
In the competitive arena, JPMorgan won the Florida Department of Transportation's $241.48 million of Series 2015A turnpike revenue bonds with a true interest cost of 3.58%.
The bonds were priced to yield from 0.33% with a 2% coupon in 2016 to 4% at par in 2040; a 2045 term bond was priced as 4s to yield 4.05%. The issue was rated Aa2 by Moody's and AA-minus by S&P.
The last time the DOT competitively sold comparable bonds was on July 22, 2014 when JPMorgan won $223.58 million of Series 2014A turnpike revenue bonds with a TIC of 3.61%.
The North Dakota Public Finance Authority sold $125 million of Series 2015A revolving fund program bonds. JPMorgan won the issue with a TIC of 3.33%.
The bonds were priced to yield from 0.46% with a 3% coupon in 2016 to 3.19% with a 5% coupon in 2035. The issue was rated triple-A by Moody's and S&P.
The last time the PFA competitively sold comparable bonds was on April 23, when Citi won $25.62 million of Series 2015B capital financing program bonds with a TIC of 3.33%.
Citi received the official award on the Texas Transportation Commission's $781.08 million of state highway fund first tier revenue refunding bonds. The issue was priced to yield from 0.86% with a 3% coupon in 2017 to 2.71% with a 5% coupon in 2026. The bonds were rated triple-A by Moody's and S&P.
Goldman, Sachs received the written award on the California Municipal Finance Authority's $92.87 million of Series 2015B revenue refunding bonds for the city of Anaheim's electric utility distribution system refunding and improvements. The bonds were priced to yield from 0.40% with a 3% coupon in 2016 to 4.07% with a 4% coupon and 3.60% with a 5% coupon in a split 2035 maturity. The bonds are rated AA-minus by S&P and Fitch.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 34,124 trades on Monday on volume of $5.543 billion.
The most active bond, based on the number of trades, was the New York City Transitional Finance Authority's Series 2015 S-2 building and revenue bond 4s of 2044, which traded 97 times at an average price of 100.083 with an average yield of 3.967%. The bonds were initially priced at 99.625 to yield 4.022%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $706.6 million to $7.82 billion on Tuesday. The total is comprised of $3.10 billion competitive sales and $4.72 billion of negotiated deals.
