Munis End Stronger as Supply Trickles In

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Top-rated municipal bonds lost earlier gains to finish unchanged on Wednesday, traders said, while U.S. Treasuries turned mixed after the Federal Reserve released minutes of its latest meeting that signaled higher interest rates may be imminent.

"Many participants expressed the view that it might be appropriate to raise the federal funds rate again fairly soon if incoming information on the labor market and inflation was in line with or stronger than their current expectations or if the risks of overshooting the committee's maximum-employment and inflation objectives increased," according to minutes of the Jan. 31-Feb. 1 Federal Open Market Committee meeting.

Members see "heightened uncertainty about the effects of possible changes in fiscal and other government policies, but … near-term risks to the economic outlook appeared roughly balanced."

The 10-year benchmark muni general obligation yield on Wednesday was flat from 2.37% on Tuesday, while the yield on the 30-year GO was steady at 3.11%, according to the final read of Municipal Market Data's triple-A scale.

Treasuries were mixed on Wednesday. The yield on the two-year Treasury rose to 1.22% from 1.20% on Tuesday, while the 10-year Treasury fell to 2.41% from 2.43%, and the yield on the 30-year Treasury bond decreased to 3.03% from 3.04%.

The 10-year muni to Treasury ratio was calculated at 98.1% on Wednesday compared to 97.7% on Tuesday, while the 30-year muni to Treasury ratio stood at 102.5%, versus 102.4%, according to MMD.

 

MSRB: Previous Session's Activity

The Municipal Securities Rulemaking Board reported 42,487 trades on Tuesday on volume of $7.47 billion.

 

Primary Market

New issue volume this week is estimated at $3.61 billion, comprised $2.08 billion of negotiated deals and $1.53 billion of competitive sales.

JPMorgan Securities priced and repriced the Michigan State Hospital Finance Authority's $178.52 million of refunding and project revenue bonds for Ascension Health Senior Credit Group as a remarketing on Wednesday to lower yields by 10 basis points.

The $95.55 million of Series 2010F-2 bonds were repriced at par to yield 1.90% in a 2047 bullet maturity with a mandatory tender date of April 1, 2021.

The $82.98 million of Series 2010F-5 bonds were repriced at par to yield 2.40% in a 2047 bullet maturity with a mandatory tender date of March 15, 2023.

The deal is rated Aa2 by Moody's Investors Service and AA-plus by S&P Global Ratings and Fitch Ratings.

Also this week, Citigroup is expected to price Alabama State Port Authority's $281 million of dock facilities revenue refunding bonds that will feature taxables, alternative-minimum tax and non-AMT bonds.

The underlying ratings are A-minus by S&P and Fitch. At least part of the deal will be insured by Assured Guaranty, which is rated AA by S&P.

Citi is also set to price California Educational Facilities Authority's $184 million of revenue bonds for Loma Linda University which features taxables and tax-exempts.

The deal is rated Baa1 by Moody's and A by S&P.

Since 2007, the California EFA has sold about $5.15 billion of bonds, with the most issuance coming in 2007 when it offered roughly $847 million.

On Thursday, the state of Delaware will competitively sell $225 million of general obligation bonds. The deal is rated triple-A by Moody's, S&P and Fitch.

Miami-Dade County will competitively sell $176.93 million of transit system sales surtax revenue refunding bonds on Thursday. The deal is rated AA by S&P and Fitch.

The Port of Seattle will competitively to sell $129.94 million of limited tax GO bonds on Thursday. The deal is rated triple-A by Moody's and S&P and AA-minus by Fitch.

The Lancaster County School District, S.C., will competitively sell $125 million of Series 2017 GOs on Thursday. The deal is rated Aa1 by Moody's and AA by S&P.

 

NYC MWFA Sets $375M Bond Sale

The New York City Municipal Water Finance Authority announced on Tuesday that it is planning to sell $375 million of tax-exempt fixed-rate refunding bonds in a negotiated deal on Tuesday, Feb. 28, after holding a one-day retail order period on Monday, Feb. 27.

The bonds will be sold through the authority's underwriting syndicate, led by book-running senior manager Siebert Cisneros Shank & Co. Barclays Capital and Raymond James will be co-senior managers.

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