NEW YORK – The municipal market was mostly flat amid light to moderate secondary trading activity Wednesday, as $831.1 million of competitive issuance from Washington state led the primary.
“The secondary is just more of the same,” a trader in New York said. “We’re carrying a firmer tone, it’s felt firmer for weeks, but there’s not enough trading to really call it better. I’d say we’re just flat.”
In the new-issue market Wednesday, Washington competitively sold $831.1 million of debt in three auctions — $365.6 million of various-purpose tax-exempt refunding GOs to JPMorgan with a true interest cost of 2.63%, $347.3 million of tax-exempt refunding GOs to Barclays Capital with a TIC of 4.21%, and $118.2 million of various-purpose taxable GOs to Citi with a TIC of 2.98%.
The state upsized the refunding component of the deal Tuesday due to current market conditions.
The JPMorgan refunding bonds mature from 2013 through 2025, with yields ranging from 0.84% with a 5% coupon in 2014 to 3.41% with a 5% coupon in 2025. Bonds maturing in 2013 were not formally re-offered. The bonds are callable at par in 2021.
The Barclays Capital new-money tax-exempts mature from 2020 through 2035, with yields ranging from 3.11% with a 5% coupon in 2022 to 4.12% with a 5% coupon in 2033. Bonds maturing in 2020, 2021, 2024, 2025, 2034, and 2035 were not formally re-offered. The bonds are callable at par in 2020.
And the Citi taxables mature from 2011 through 2020, yielding 3.44% in 2018, 3.64% in 2019, and 3.79% in 2020, all priced at par. None of the other bonds were formally re-offered. The bonds are not callable.
The credit is rated Aa1 by Moody’s Investors Service and AA-plus by both Standard & Poor’s and Fitch Ratings.
The Treasury market was mixed Wednesday. The benchmark 10-year note was quoted recently at 3.01% after opening at 3.05%. The 30-year bond was quoted recently at 4.08% after opening at 4.08%. The two-year note was quoted recently at 0.62% after opening at 0.65%.
The Municipal Market Data triple-A scale yielded 2.57% in 10 years and 3.67% in 20 years Wednesday, matching levels of 2.57% and 3.67% Tuesday. The scale yielded 3.97% in 30 years Wednesday, matching 3.97% Tuesday.
Wednesday’s triple-A muni scale in 10 years was at 86.0% of comparable Treasuries and 30-year munis were at 97.5%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 105.3% of the comparable London Interbank Offered Rate.
“It’s pretty quiet on the Street,” a trader in Los Angeles said. “Most of the attention has been fixated on the primary.”
Elsewhere in the new-issue market Wednesday, Maryland competitively sold approximately $297 million of taxable and tax-exempt debt, including $75 million of taxable Build America Bonds.
Bonds from the $221.7 million tax-exempt series were sold to Bank of America Merrill Lynch and mature from 2013 through 2021. Yields range from 0.60% with a 5% coupon in 2013 to 2.60% with a 2.5% coupon in 2020. Bonds maturing in 2021 were sold but not available. The bonds are callable at par in 2018.
Bonds from the $75 million of BABs mature from 2022 through 2025, yielding 4.15% in 2023, 4.20% in 2024, and 4.30% in 2025, or 2.70%, 2.73%, and 2.80%, all priced at par. Bonds maturing in 2022 were not formally re-offered. The bonds were priced to yield 110, 115, and 125 basis points over 10-year Treasuries.
The credit is rated triple-A by all three major ratings agencies.
Bank of America Merrill Lynch priced $98.0 million of mortgage revenue bonds for the Oregon Housing and Community Services Department in two series.
Bonds from the $35.9 million Series A mature from 2011 through 2026 with a term bond in 2030. Yields range from 0.35% in 2011 to 4.375% in 2030, all priced at par. The bonds are callable at par in 2020.
Bonds from the $54.1 million Series B, which are subject to the alternative minimum tax, mature from 2011 through 2024 with a term bond in 2030. The bonds are callable at par in 2020, except bonds maturing in 2030, which are callable at 101.4 in 2020, declining to par in 2022.
The credit is rated Aa2 by Moody’s.
Also, Stifel, Nicolaus & Co. priced for retail investors $212.6 million of unlimited and limited tax GO bonds for Columbus, Ohio in two series.
Bonds from the $192.1 million unlimited tax Series A mature from 2012 through 2028, with yields ranging from 0.44% with a 2% coupon in 2012 to 3.71% with a 3.6% coupon in 2028. The bonds are callable at par in 2028.
Bonds from the $20.5 million limited tax Series B mature from 2012 through 2026, with yields ranging from 0.44% with a 2% coupon in 2012 to 3.51% with a 3.4% coupon in 2026. The bonds are callable at par in 2020.
The bonds, which are set to price for institutional investors Thursday, are rated triple-A by all three major ratings agencies.
In economic data released Wednesday, new orders of durable goods unexpectedly declined 1.0% in June, the second consecutive monthly drop and the largest decline in 10 months.
Excluding transportation, orders fell 0.6%, the second decline in three months.
Economists predicted durable goods orders would increase 1.0% for the month and orders excluding transportation would increase 0.4%, according to the median estimate from Thomson Reuters.
Visible Supply
The Bond Buyer’s 30-day visible supply fell $2.207 billion to $9.157 billion. The total is comprised of $3.463 billion of competitive bonds and $5.694 billion of negotiated bonds.
Previous Session's Activity
The Municipal Securities Rulemaking Board reported 45,508 trades on 15,579 issues for volume of $12.13 billion. Most active was Florida’s Broward County School Board 6.45s of 2027 bonds that traded 321 times at a high of 103.040 and a low of 100.464.
