Bond yields at a glance

MBIS benchmark (~AA)

MBIS AAA

MMD AAA

U.S. Treasuries

10 year

2.560

2.472

2.34

2.73

30 year

3.000

2.909

2.91

2.98

MBIS indices are updated hourly on the Bond Buyer Data Workstation.

Hawaii and Ohio led the primary market Tuesday as the muni market awaited President Trump's State of the Union address and any details he may provide on infrastructure spending proposals.

"I think for bond guys it comes down to defense spending and infrastructure," said one market participant. "What’s the plan, and how much, if any, of a boost to the economy will it bring?”

But some buyside experts say municipal investors who are spooked by Trump's proposed $1.7 trillion infrastructure stimulus plan likely don't have much to worry about in the near term.

"It seems very unlikely and I don't see the infrastructure legislation coming between now and the November elections," Jim Robinson, founder and chief investment officer at Gross Pointe Farms, Mich.-based Robinson Capital Management, said in an interview on Tuesday.

U.S. President Donald Trump will address Congress Tuesday evening.
U.S. President Donald Trump will address Congress Tuesday evening. Bloomberg News

Trump's plan aims to rebuild the country's crumbling infrastructure by stimulating as much as $1.7 trillion in state, local, and private financing to build and repair the nation's aging bridges, highways, waterworks, and other infrastructure.

Despite Robinson's doubts, he said if the package were to pass later this year, he believes the municipal burden of that stimulus would be "considerably smaller than the total."

"There would be some combination of private investment as well as federal monies that would find their way into that package -- it would not just be municipals bearing the brunt of this," Robinson, who manages the $160 million Robinson Tax Advantaged Income Fund [Ticker: ROBNX], said.

At the same time, the market would need time to "digest" and adjust to a large influx of supply, he added.

"The biggest concern would be a supply spike if you did get the $1.7 trillion infrastructure spend," Robinson said. "That would be a terrifying spike that the market would be challenged to absorb."

There is also investor concern and cautiousness regarding the Federal Reserve's two-day meeting this week, according to Robinson. The Fed was to announce its decision on monetary policy on Jan. 31 -- even though analysts widely expect the Fed to stand pat on interest rates.

Robinson said the outcome of the meeting will be interesting given that "the bond market seems to think the Fed may be on a faster pace in the coming year of raising rates compared to the dot plots of previous meetings."

"Tax reform for corporate America should be a huge boost to the economy," Robinson said. "They could very well be on a faster pace."

He noted that the unique timing of the fiscal stimulus could prompt action on the part of the Fed.

"We have never seen this sort of fiscal stimulus this late in an economic cycle," he explained. "We may blow past the 2% target and could be staring 3% or higher inflation in the eye, and then the Fed would have to move quickly."

Primary market
Bank of America Merrill Lynch priced and repriced Hawaii's $775 million of Series 2018 FT general obligation bonds and Series 2018 FU and FV taxable GOs on Tuesday.

The $647.92 million of Series FT bonds were repriced to yield from 1.83% with 4% and 5% coupons in a split 2022 maturity to 3.10% with a 5% coupon in 2038.

The $50 million of Series FU taxables were repriced at par to yield 2.20% in 2019, 2.375% in 2020 and 2.75% in 2021.

The $77.08 million of Series FV taxables were repriced at par to yield 1.75% in 2018.

The deal is rated Aa1 by Moody's Investors Service, AA-plus by S&P Global Ratings and AA by Fitch Ratings.

Citigroup priced Ohio’s $488.43 million of turnpike revenue bonds.

The $72.37 million of Series 2018A turnpike revenue bonds were priced as 4s to yield 3.41% in 2037 and 3.44% in 2038 and as 5s to yield 3.13% in 2043.

The $416.06 million of Series 2018A junior lien turnpike revenue bonds for infrastructure projects were priced to yield from 2.56% with a 5% coupon in 2027 to 3.40% with a 4% coupon and 3.06% with a 5% coupon in a split 2033 maturity and to yield from 3.13% with a 5% coupon in 2035 to 3.56% with a 4% coupon in 2038. A 2043 maturity was priced as 5s to yield 3.28% and a split 2046 maturity was priced as 4s to yield 3.71% and as 5s to yield 3.31%

The senior liens are rated Aa2 by Moody’s, AA-minus by S&P and AA by Fitch while the junior liens are rated Aa3 by Moody’s and A-plus by S&P and Fitch.

Wells Fargo Securities priced and repriced the Hampton Roads, Va., Transportation Accountability Commission's $500 million of Series 2018A senior lien revenue bonds on Tuesday.

The issue was priced as 5s to yield from 2.15% in 2025 to 3.06% in 2038, 3.14% in 2042, 3.21% in 2048, 3.33% in 2052 and as 5 1/2s to yield 3.31% in 2057.

The deal is rated AA by S&P and AA-plus by Fitch.

Citigroup priced the Washington Health Care Facilities Authority’s $141.69 million of Series 2018B tax-exempt refunding revenue bonds for Providence St. Joseph Health.

The issue was priced as 5s to yield from 2.52% in 2025 to 3.17% in 2033.

The deal is rated Aa3 by Moody’s and AA-minus by S&P and Fitch.

Since 2008, the authority has sold about $7.76 billion of bonds, with the most issuance occurring in 2008 when it sold $1.57 billion and the least amount in 2016 when it sold $32 million.

Morgan Stanley as senior manager priced the Mt. San Jacinto Community College District, Calif.’s $120 million of Series B election of 2014 general obligation bonds.

The issue was priced to yield from 1.34% with a 3% coupon in 2019 to 3.31% with a 4% coupon in 2038; a 2043 maturity was priced as 4s to yield 3.41%.

The deal is rated Aa1 by Moody’s and AA by S&P.

JPMorgan Securities priced the Tri-County Metropolitan Transportation District of Oregon’s $113.9 million of Series 2018 capital grant receipt revenue bonds.

The issue was priced to yield from 1.80% with a 5% coupon in 2020 to 3.64% with a 3.25% coupon in 2034.

The deal is rated A3 by Moody’s and A by S&P.

There are no competitive sales of $100 million or above slated for the week.

Bond Buyer 30-day visible supply at $5.07B
The Bond Buyer's 30-day visible supply calendar decreased $2.06 billion to $5.07 billion on Wednesday. The total is comprised of $1.37 billion of competitive sales and $3.69 billion of negotiated deals.

MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 41,095 trades on Monday on volume of $10.67 billion.

California, New York and Texas were the three states with the most trades on Tuesday, with the Golden State taking 13.729% of the market, the Empire State taking 9.213% and the Lone Star State taking 8.99%.

Treasury sells 1-year, 4-week bills
The Treasury Department Tuesday auctioned $20 billion of 364-day bills at a 1.830% high yield, a price of 98.149667.

The coupon equivalent was 1.882%. The bid-to-cover ratio was 3.36. Tenders at the high rate were allotted 61.09%. The median yield was 1.810%. The low yield was 1.780%.

Treasury also auctioned $25 billion of four-week bills at a 1.440% high yield, a price of 99.888000.

The coupon equivalent was 1.462%. The bid-to-cover ratio was 2.76. Tenders at the high rate were allotted 15.76%. The median rate was 1.360%. The low rate was 1.250%.

Gary Siegel contributed to this report.

Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Vanessa Kim at 212-803-8474 for more information.

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