The municipal bond market is seeing more deals being priced Wednesday — this time on the negotiated side — after more than $2 billion of competitive new issues came to market on Tuesday.
Prices of top-shelf municipal bonds continued to move lower with Treasuries, traders said, as yields on some maturities were up by as much as six basis points at mid-session.
Primary Market
Mississippi offered almost $713 million of bonds in four separate deals. All series were rated Aa2 by Moody's Investors Service, AA by Standard & Poor's and AA-plus by Fitch Ratings.
Raymond James priced Mississippi's $154.685 million tax-exempt Series 2015A general obligation bond issue. The issue was priced to yield from 2.33% with a 5% coupon in 2026 to 3.15% with a 4% coupon in 2035.
Bank of America Merrill Lynch priced the state's $128.95 million Series 2015B taxable GOs. The bonds were priced at par to yield from 0.28% in 2015 to 2.979% in 2026.
J.P. Morgan Securities priced the state's $249.98 million Series 2015C refunding GOs. The bonds were priced to yield from 0.86% with a 5% coupon in 2018 to 2.69% with a 4% coupon in 2028.
RBC Capital Markets priced the state's $179.135 million Series 2015D taxable refunding GOs. The bonds were priced at par to yield from 0.31% in 2015 to 3.729% in 2032.
JPMorgan priced the Iowa Finance Authority's $323.46 million of state revolving fund revenue bonds. The bonds were priced to yield from 0.37% with a 4% coupon in 2016 to 2.68% with a 5% coupon in 2035; a 2015 maturity was offered as a sealed bid. The issue is rated triple-A by Moody's, S&P and Fitch.
The SRF bonds are designated as "green bonds," since the proceeds will be used to finance projects that adhere to the federal Clean Water Act and Safe Drinking Water Act. Some of the proceeds will be used to refund outstanding bonds and some will be used to reimburse the SRF for disbursements to existing loans.
The fund is jointly administered by the Iowa Finance Authority and the Iowa Department of Natural Resources. Since its inception in 1975, the SRF has provided low-cost financing of more than $2.4 billion to over 500 municipalities to upgrade or construct their drinking water and wastewater infrastructure.
Also on tap is the $1 billion composite deal from the Trinity Health Credit Group. The bonds are scheduled to be priced by Bank of America Merrill Lynch in three series — one each from Michigan, Idaho and Maryland. About $75 million in interest-rate savings is expected from the refunding section. The issue is rated Aa3 by Moody's, AA-minus by S&P and AA by Fitch.
Additionally, Morgan Stanley is expected to price the $499 million Los Angeles Department of the Airports, Calif., offering. The issue is in three series: senior revenue bonds, Series A (AMT); senior revenue bonds Series B (non-AMT); and subordinate refunding revenue bonds, Series C. The senior bonds are rated Aa3 by Moody's and AA by S&P and Fitch, while the subordinate bonds are rated A1 by Moody's and AA-minus by Standard & Poor's and Fitch.
Secondary Market
Prices of top-quality municipal bonds are lower at midday.
The yield on the muni 10-year benchmark general obligation was up from three to five basis points from 1.80% on Tuesday, while the yield on 30-year GOs was up from four to six basis points from 2.59%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices moved lower on Wednesday. The two-year note yield rose to 0.53% from 0.50% on Tuesday; the 10-year yield increased to 1.82% from 1.77%, while the 30-year yield jumped to 2.41% from 2.36%.
On Tuesday, the 10-year muni to Treasury ratio decreased to 101.1% from 104.2% on Monday, while the 30-year muni to Treasury ratio declined to 109.3% from 111.1%.
MSRB Reports Previous Session's Activity
The Municipal Securities Rulemaking Board reported 36,590 trades on Tuesday on volume of $7.186 billion.
Most active on Tuesday, based on the number of trades, was the Tulare Local HealthCare District, Calif., taxable Series 2005B Build America Bonds of Sept. 10, 2009, 7.95s of 2035, which traded 108 times with an average price of 109.396 and an average yield of 5.559%.
