Hawaii taxables price as market weakens ahead of Trump, Fed

Several big deals hit the primary on Tuesday as the municipal bond market weakened along with Treasuries ahead of President Donald Trump’s State of the Union address and the Federal Reserve's monetary policy meeting.

Yields on municipal bonds were trading one to two basis points higher while top-rated muni yields were up two to four basis points.

Primary market
Bank of America Merrill Lynch priced 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 priced to yield from 1.80% with 4% and 5% coupons in a split 2022 maturity to 3.11% with a 5% coupon in 2038.

The $50 million of Series FU taxables were priced at par to yield 2.20% in 2019, 2.375% in 2020 and 2.50% in 2021.

The $77.08 million of Series FV taxables were priced 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.

Wells Fargo Securities priced 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 2.22% in 2025 to 3.06% in 2038, 3.13% in 2043, 3.21% in 2048, 3.31% in 2052 and as 5 1/4s to yield 3.31% in 2057.

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

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.

Also on Tuesday, Citigroup is expected to price Ohio’s turnpike revenue bonds for infrastructure projects. 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.

Citi is set to price the Providence St. Joseph Health Obligated Group’s $350 million of Series 2018A taxable corporate CUSIP bonds. The deal is rated Aa3 by Moody’s and AA-minus by S&P and Fitch.

Citi is also expected to price the Washington Health Care Facilities Authority’s $139.7 million of Series 2018B tax-exempt refunding bonds for Providence St. Joseph Health. 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.

Goldman Sachs is expected to price the Orlando Health Obligated Group’s $480 million of Series 2018 taxable corporate CUSIP hospital revenue bonds.

The deal is rated A2 by Moody’s and A by S&P.

BAML is set to price the Upper Arlington City School District of Franklin County, Ohio’s $221 million of Series 2018A unlimited tax general obligation school facilities construction and improvement bonds. The deal is rated Aa1 by Moody’s and AAA by S&P.

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

Bond Buyer 30-day visible supply at $7.13B
The Bond Buyer's 30-day visible supply calendar increased $189.6 million to $7.13 billion on Tuesday. The total is comprised of $1.38 billion of competitive sales and $5.75 billion of negotiated deals.

Muni market wants to know how Trump will pay for infrastructure
The municipal bond market will be watching President Donald Trump’s State of the Union address on Tuesday night to see if he offers any details on how he plans to pay for his proposals on infrastructure spending.

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

Some market observers have been skeptical that any multi-billion dollar plan for infrastructure could get bipartisan support with so few specifics on how to fund and finance it.

The market is also eyeing the Federal Open Market Committeetwo-day meeting in Washington. While market participants don’t expect the Fed to raise interest rates on Wednesday, it is the last meeting over which Chair Janet Yellen will preside.

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.