The $1.7 billion California tobacco bond deal is set to be priced for institutions on Wednesday after a one-day order period was held on Tuesday as more deals are set to hit the screens in the municipal bond market.
Secondary Market
Treasury prices were mixed on Wednesday. The yield on the two-year Treasury note rose to 0.57% from 0.56% on Tuesday, while the 10-year yield declined to 1.85% from 1.87% and the 30-year yield decreased to 2.45% from 2.46%.
On Tuesday, top-quality munis closed steady for the second day in a row. The yield on the 10-year benchmark muni general obligation on Tuesday was unchanged from 1.94% on Monday, while the yield on 30-year GO remained at 2.76%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated on Tuesday at 103.4% versus 101.3% on Monday, while the 30-year muni to Treasury ratio stood at 112.1% compared to 110.0%.
Primary Market
Citigroup Global Markets priced the California's Golden State Tobacco Securitization Corp.'s $1.69 billion of Series 2015A enhanced tobacco settlement asset-backed bonds ahead of the institutional pricing on Wednesday.
The issue was priced for retail to yield from 0.72% with a 3% coupon in 2017 to 2.02% with a 5% coupon in 2022; as 5s to yield 2.55% in 2026; as 4s to yield 4.38% in 2031; as 3 1/2s to yield 3.60 and as 5s to yield 3.16% in a split 2032 maturity; as 4s to yield 3.67 and as 5s to yield 3.27% in a split 2035 maturity; and as 5s to yield 3.40 and as 4s to yield 3.80% in a split 2045 maturity.
No retail orders were being taken in the 2033, 2034 or 2040 maturities; the 2016 maturity was offered as a sealed bid.
The asset-backed securities are rated A1 by Moody's Investors Service and A by Standard & Poor's and Fitch Ratings.
In other action in Tuesday, the University of Kentucky sold three separate competitive issues. Morgan Stanley won UK's $148.93 million of Series 2015 A general receipts bonds with a true interest cost of 3.6044%. Morgan Stanley also won the $97.44 million of Series 2015 B general receipts refunding bonds with a TIC of 2.2997%. And Citigroup won $19.70 million of general receipts refunding bonds with a TIC of 1.9577%. All three issues are rated Aa2 by Moody's and AA by S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $710.6 million to $12.125 billion on Wednesday. The total is comprised of $3.238 billion competitive sales and $8.887 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 39,018 trades on Tuesday on volume of $8.447 billion.
Most active on Monday, based on the number of trades, was the Kentucky Municipal Power Agency's Series 2015A Prairie State project power system revenue refunding 4s of 2029, which traded 164 times at an average price of 99.898 with an average yield of 3.989%; (initial offering price of 97.858, an initial offering yield of 4.14%).
