Top-quality municipal bonds ended weaker on Wednesday, according to traders, as large competitive offerings from Maryland and Nevada issuers hit the market.
Secondary Market
The 10-year benchmark muni general obligation yield rose seven basis points to 2.36% from 2.29% on Tuesday, while the yield on the 30-year GO increased seven basis points to 3.12% from 3.05%, according to the final read of Municipal Market Data's triple-A scale.
U.S. Treasuries were weaker on Wednesday as stock prices soared to record levels. The Dow Jones Industrial Average rose past 21,000 for the first time after President Donald Trump's Tuesday night address to Congress, which highlighted his economic growth policies.
The yield on the two-year Treasury rose to 1.28% from 1.22% on Tuesday, while the 10-year Treasury yield gained to 2.46% from 2.36%, and the yield on the 30-year Treasury bond increased to 3.07% from 2.97%.
"Treasuries were pressured right out of the chute, but stronger stocks [were] not all that pushed rates higher," MMD Senior Market Analyst Randy Smolik wrote in a Wednesday market comment. "Fed officials recently have indicated more urgency in hiking rates as soon as March. The fed funds market had taken the odds of a hike in March from around 30% last week to in excess of 60%."
With Chair Janet Yellen and Vice Chair Stanley Fischer both speaking Friday, before the blackout period, the market could get a clearer indication of the possibility of a rate hike at the meeting in two weeks.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 43,959 trades on Tuesday on volume of $9.22 billion.
Primary Market
In the competitive arena on Wednesday, Baltimore County, Md., sold $545 million of notes and bonds in three separate sales.
Bank of America Merrill Lynch won the $225 million of Series 2017 metropolitan district bond anticipation notes with a true interest cost of 0.85%. The BANs were priced as 3s to yield 0.87% in 2018.
BAML also won the $121 million of Series 2017 consolidated public improvement BANs with a TIC of 0.90%. The BANs were priced as 3s to yield 0.87% in 2018.
And BAML won the $199 million issue with a TIC of 3.21%. The deal was broken into two pieces. The $99.3 million of metropolitan district bonds, 79th Issue, were priced to yield from 1.01% with a 5% coupon in 2019 to 3.45% with a 4% coupon in 2037; a 2042 maturity was priced as 4s to yield 3.60% and a 2047 maturity was priced as 4s to yield 3.65%. The $99.8 million of Series 2017 consolidated public improvement bonds were priced to yield from 1.01% with a 5% coupon in 2019 to 3.45% with a 4% coupon in 2037.
The BANs are rated MIG1 by Moody's Investors Service, SP1-plus by S&P Global Ratings and F1-plus by Fitch Ratings. The bonds are rated triple-A by Moody's, S&P and Fitch.
Since 2007, Baltimore County has sold about $4.22 billion of bonds, with the most issuance coming in 2012 when it offered $704 million. Although the county has come to market every year during this period, it twice issued less than $50 million: it issued $41 million in 2008 and just $11.8 million in 2013.
Clark County, Nev., competitively sold $321.64 million of Series 2017 limited tax general obligation bond bank refunding bonds additionally secured by pledged revenues.
BAML won the bonds with a TIC of 3.42%. The issue was priced to yield from 1.10% with a 5% coupon in 2019 to 3.76% with a 4% coupon in 2038.
The deal is rated Aa1 by Moody's and AA-plus by S&P.
In the negotiated sector on Wednesday, Barclays Capital priced the New Jersey Educational Facilities Authority's $119.91 million of Series 2017A revenue bonds for the Stevens Institute of Technology.
The issue was priced to yield from 1.17% with a 4% coupon in 2018 to 3.71% with a 5% coupon in 2037; a 2042 maturity was priced as 5s to yield 3.74% and a split 2047 maturity was priced as 4s to yield 4.07% and as 5s to yield 3.79%.
The deal is rated A-minus by S&P.
