Municipal bonds were stronger at mid-session, according to traders, as yields on some maturities weakened by as much as two basis points.
Secondary Market
The yield on the 10-year benchmark muni general obligation was as much as one basis point weaker from 2.05% on Monday, while the 30-year yield was off as much as two basis points from 3.00%, according to a read of Municipal Market Data's triple-A scale.
Treasury yields were mixed on Tuesday. The two-year Treasury yield rose to 0.93% from 0.92% on Monday while the 10-year Treasury yield fell to 2.22% from 2.25% and the 30-year yield increased to 3.01% from 3.00%.
The 10-year muni to Treasury ratio was calculated on Monday at 91.3% from 91.1% on Friday, while the 30-year muni to Treasury ratio stood at 99.8% compared to 99.8%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 37,290 trades on Monday on volume of $5.63 billion.
Primary Market
RBC Capital Markets is expected to price the Minnesota Housing Finance Agency's $136.45 million of residential housing finance bonds.
The deal is tentatively structured as $96.93 million of Series 2015E alternative minimum tax bonds and $39.52 million of Series 2015 F non-AMT bonds. The issue is rated Aa1 by Moody's Investors Service and AA-plus by Standard & Poor's.
Kutak Rock is bond counsel and CSG Advisors is the financial advisor on the deal.
Since 2005, the agency has issued about $4.2 billion of debt. The most issuance took place in 2006 and 2007, when the MHFA sold $686 million and $587 million, respectively. The agency sold the least amount of debt in 2010 and 2011, when they issued just $86 million and $248 million, respectively. Since 2005, the MHFA has come to market an average of 8.8 times a year.
Wells Fargo Securities is expected to price the Mississippi Development Bank's Municipal Energy Agency's $86.72 million of power supply refunding bonds. The deal is tentatively structured to mature from 2016 to 2035 and includes a 2041 term bond.
At least part of the deal is expected to be insured by Assured Guaranty Municipal. The issue is rated A2 by Moody's and AA by S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $1.08 billion to $7.44 billion on Tuesday. The total is comprised of $3.64 billion competitive sales and $3.80 billion of negotiated deals.
U.S. Virgin Islands' GARVEEs Rated A by S&P
Standard & Poor's assigned an A rating to the Virgin Islands Public Finance Authority's $91.2 million of Series 2015 grant anticipation revenue bonds (GARVEEs), issued for the U.S. Virgin Islands. The outlook is stable.
"The rating reflects our view of structural provisions that allow funds to flow directly from the Federal Highway Administration to trustee-held debt service accounts -- upon semiannual funding authorization requests by the authority -- before flowing to other purposes, as well as a significant historical precedent that demonstrates a federal commitment and Congressional approval for federal aid for highway programs and specific funding mechanisms to U.S. territories dating back to 1970, though modifications have been made over time," S&P credit analyst Mary Ellen Wriedt said in a press release.
The bonds are being issued to finance construction of transportation projects on St. Thomas and St. Croix. This is the only GARVEE issuance for VIPFA in 2015.
In 2014, Virgin Islands issuance rose 95.8% to $351 million. Most of that supply came from the VIPA, which issued $247.5 million of Series 2014C bonds last November.
In February, S&P revised the outlook on VIPA to stable from positive and affirmed its triple-B long-term senior note rating and triple-B-minus subordinated note rating.
In June, Fitch Ratings affirmed VIPA's $765.8 million of outstanding Virgin Islands gross receipts tax loan note/senior lien bonds at BBB and kept the outlook at negative.
