Prices of top-rated municipal bonds on were lower at market close on Tuesday, according to traders.
The market was busy Tuesday, as Cypress-Fairbanks Independent School District priced and then re-priced, Medford school district No. 549 C priced and California’s $1.9 billion of GO bonds priced for retail. In the competitive market, Florida State Board of Education sold $230.335 million of refunding bonds.
Primary Market
Bank of America Merrill Lynch and Morgan Stanley priced the retail portion of the biggest deal of the week - California's $1.9 billion of general obligation bonds. The general obligation new money part of the deal for $790 million is 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 is 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 and A-plus by both S&P and Fitch Rating and institutional pricing is expected to take place on Wednesday.
Cypress-Fairbanks ISD, Texas’s $313.45 million of unlimited tax refunding bonds were re-priced by Raymond James as 5s to yield from 0.95% in 2018 to 2.79% in 2030 and as 4s to yield from 3.17% in 2031 to 3.37% in 2035. Based on the participation of the permanent school fund guarantee program, the deal is rated triple-A by both Moody’s and S&P.
Piper Jaffray priced Medford School District No. 549C, Ore.’s $137.485 million of general obligation refunding bonds as 2s to yield 0.84% in 2017 and from 2.96% with a 5% coupon in 2033. Based on the participation of the Oregon school bond guaranty act, the deal is rated Aa1 by Moody’s and AA-Plus by S&P.
On the competitive side, JPMorgan won the bid for the $230.335 million Florida State Board of Education public education capital outlay refunding bonds, 2015 Series B with a true interest cost of 2.1872%. The deal is priced as 5s to yield from 0.30% in 2016 to 3.10% in 2029, except the 2025 and 2029 maturities, which have a 3% coupon. It is rated Aa1 by Moody’s and triple-A by both S&P and Fitch.
Secondary Market
The yield on the 10-year benchmark muni general obligation on Tuesday was three basis points higher to 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.
Treasury prices were weaker at close on Tuesday, as the yield on the two-year Treasury note increased to 0.68% from 0.66% on Monday while the 10-year yield rose to 2.12% from 2.08% and the 30-year yield rose to 2.71% from 2.68%.
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%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $861.8 million to $12.686 billion on Tuesday. The total is comprised of $3.710 billion competitive sales and $8.976 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 37,218 trades on Monday on volume of $7.960 billion.
Most active on Monday, based on the number of trades, was the New York City Transitional Finance Authority future tax secured tax-exempt subordinate bonds fiscal 2015 Series C 3s of 2028, which traded 421 times at an average price of 99.877, with an average yield of 3.01%.
