After a busy day in the market on Tuesday that saw deals from Cypress-Fairbanks Independent School District, Medford School District No. 549 C, and Florida State Board of Education, as well as California priced for retail, the market will see plenty more action on Wednesday, headlined by California's institutional pricing.
Primary Market
California's $1.9 billion general obligation bonds are scheduled for institutional pricing, after retail pricing on Tuesday. Bank of America Merrill Lynch and Morgan Stanley priced the deal for retail with the $790 million new money part priced as 4s to yield 0.17% in 2016 and from 1.84% in 2022 to 2.35% in 2025 and as 5s in 2026 to yield 2.51%. The deal also features a 3% coupon in 2029 to yield 3.17% and a 3.25% coupon in 2032 to yield 3.37%. There is a split maturity in 2045, with $50 million priced as 4s to yield 3.60% and $50 million as 5s to yield 3.20%. Another $150 million wasn't offered for retail. Additionally, no retail orders were taken for the 2027-2028, 2030-2031 and 2033 maturities.
The $1.11 billion refunding part of the deal was priced to yield from 0.17% in a split maturity in 2016, with $50 million as 2s, $50 million as 3s and $59 million as 5s, to 2.35% in a split maturity in 2025 that has $20 million as 4s and $23 million as 5s. No retail orders were taken for the 2026 through 2030 maturities. The deal is rated Aa3 by Moody's Investors Service and A-plus by both Standard and Poor's and Fitch Ratings.
Maryland is scheduled to auction two issues totaling $922 million on Wednesday. The sales consist of $518 million tax-exempt First Series A State and Local Facilities Loan of 2015 GOs and $404 million First Series B State and Local Facilities Loan of 2015 refunding GOs. The issues are rated triple-A by Moody's, S&P and Fitch.
Also expected to come to market today is the Arizona State University, which will be separated into three series totaling $352.01 million. Wells Fargo is the lead manager on this deal that is rated Aa3 by Moody's and triple-A by S&P.
Wells Fargo is also expected to price the University of Virginia's $169.595 million of general revenue pledge refunding bonds that will be separated into two series. The deal is rated triple-A by both Moody's and S&P and has an expected triple-A rating from Fitch as well.
Wells Fargo earns a hat trick, as it is expected to price a third large deal: Indiana University's $160.55 million of consolidated revenue bonds. This deal has a triple-A rating from Moody's and an expected AA-plus from S&P.
Secondary Market
Treasury prices were stronger Wednesday morning, as the yield on the two-year Treasury note decreased to 0.67% from 0.68% at the close Tuesday, while the 10-year yield dropped to 2.10% from 2.12% and the 30-year yield declined to 2.69% from 2.71%.
The yield on the 10-year benchmark muni general obligation on Tuesday was three basis points higher at 2.08% from Monday's 2.05%, while the yield on the 30-year GO also increased by three basis points to 2.93% from 2.90%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated at 97.9% on Tuesday versus 98.5% on Monday, while the 30-year muni to Treasury ratio stood at 107.9% compared to 108.1%.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 41,024 trades on Tuesday on volume of $7.165 billion.
Most active on Tuesday, based on the number of trades, was the city of Chicago general obligation bonds, refunding Series 2012C 5s of 2023, which traded 179 times at an average price of 107.027, with an average yield of 3.819%.
