Top rated municipal bonds were slightly stronger at mid-session, traders said, ahead of the Federal Reserve’s announcement on interest rates.
In the primary, a California issuer came to market with almost $1 billion of bonds just one day after the massive Ascension Health Alliance deal was priced.
The Federal Open Market Committee is meeting in Washington and is widely expected to keep its fed funds target rate unchanged at between 0.25% and 0.50%. Market participants will be looking at the Fed’s statement released at 2 p.m., ET, for any indications on future FOMC moves.
Secondary Market
The yield on the 10-year benchmark muni general obligation was as much as one basis point weaker from 1.66% on Tuesday while the 30-year muni yield was as much as one basis point weaker from 2.63%, according to a midday read of Municipal Market Data's triple-A scale.
U.S. Treasuries were slightly stronger on Wednesday. The yield on the two-year Treasury decreased to 0.85% from 0.86% on Tuesday, while the 10-year Treasury yield dropped to 1.90% from 1.93% and the yield on the 30-year Treasury bond declined to 2.73% from 2.75%.
The 10-year muni to Treasury ratio was calculated at 86.0% on Tuesday compared with 86.8% on Monday, while the 30-year muni to Treasury ratio stood at 95.4% versus 95.8%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 39,945 trades on Tuesday on volume of $8.94 billion.
Primary Market
Bank of America Merrill Lynch priced the California Statewide Communities Development Authority’s $947.62 million of Series 2016A revenue bonds for the Loma Linda University Medical Center on Wednesday.
The issue was priced as 5s to yield from 3.34% in 2025 to 3.97% in 2031; a 2036 maturity was priced as 5s to yield 4.32%; a 2041 maturity was priced as 5s to yield 4.50%, a 2046 term bond was priced as 5s to yield 4.55%; and a 2056 term was priced as 5 1/4s to yield 4.75%.
The deal is rated BB by Standard & Poor’s and BB-plus by Fitch Ratings.
Since 2006, the SCDA has sold over $22 billion of debt, with over $4 billion of bonds sold in 2007, 2008 and 2009. The least amount of issuance was in 2013 when the authority sold $516 million of bonds.
Citigroup priced the Texas Private Activity Bond Surface Transportation Corp.’s $272 million of tax-exempt senior lien revenue bonds for the Blueridge Transportation Group’s SH 288 Toll Lanes Project.
The issue was priced as 5s to yield 3.64% in 2040, 3.72% in 2045, 3.83% in 2050 and 3.93% in 2055. The deal, which is subject to the alternative minimum tax, is rated Baa3 by Moody’s Investors Service and BBB-minus by S&P.
RBC Capital Markets is set to price the Mountain View Whisman School District, Santa Clara County, Calif.’s $148 million of Election of 2012 Series B general obligation bonds on Wednesday. The deal is rated Aaa by Moody’s and AA by S&P.
On Wednesday, Piper Jaffray received the official award on the Ohlone Community College District, Alameda County, Calif.’s $155 million Election of 2010 Series C GOs. The issue was priced to yield from 0.50% with a 2% coupon in 2016 to 3.17% with a 3% coupon in 2038; a 2041 term bond was priced as 4s to yield 2.98% and a 2045 term was priced as 4s to yield 3.03%. The deal was rated Aa2 by Moody’s and AA by Fitch.
On Tuesday, Morgan Stanley priced and repriced Ascension Health Alliance’s $1.2 billion healthcare deal through four conduit issuers for the Ascension Senior Credit Group.
"As expected, current market conditions resulted in broad demand for the credit. The transaction was expected to have a nice reception and considering absolute yield levels and historical spread comparisons it did," said Adam Buchanan, a senior vice president in Ziegler's institutional sales and trading group.
The Wisconsin Health & Educational Facilities Authority’s $1.02 billion of Series 2016A revenue bonds were repriced to yield from 0.75% with a 3% coupon in 2018 to 3.25% with a 3.125% coupon, 3.15% with a 4% coupon and 2.75% with a 5% coupon in a 2036 triple-split maturity. A 2039 triple-split maturity was priced with 4%, 4.50% and 5% coupons to yield 3.24%, 3.04% and 2.84% respectively. A 2046 term bond was priced as 4s to yield 3.35%.
The Alabama Special Care Facilities Authority of Birmingham’s $73.15 million of Series 2016B revenue bonds were priced as 5s to yield 2.98% in a 2046 bullet maturity. The Alabama Special Care Facilities Authority of Mobile’s $87.89 million of Series 2016C revenue bonds were priced as 5s to yield 2.98% in a 2046 bullet maturity.
The Michigan Finance Authority’s $65.63 million of Series 2016E-1 hospital project and refunding revenue bonds were repriced at par to yield 1.10% in a 2046 bullet maturity.
The deal was rated Aa2 by Moody’s, and AA-plus by S&P and Fitch.
Wells Fargo Securities won the Virginia Public Schools Authority’s $101.77 million of Series 2016A 1997 resolution school financing and refunding bonds on Tuesday with a true interest cost of 2.41%. The issue was priced to yield from 0.64% with a 5% coupon in 2017 to 3.083% with a 3% coupon in 2036. The bonds are rated Aa1 by Moody’s and AA-plus by S&P and Fitch.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $3.84 billion to $9.33 billion on Wednesday. The total is comprised of $4.05 billion of competitive sales and $5.28 billion of negotiated deals.
Yvette Shields contributed to this report
