The municipal bond market is seeing the last of this week's big issues priced on Wednesday, as the largest sale of the week came to market.
High-grade municipal bond prices were little changed at mid-session, according to Municipal Market Data.
Wednesday's Primary
Morgan Stanley priced the Los Angeles, Calif., Community College District's $1.797 billion general obligation and general obligation refunding bonds. The deal is comprised of new-money and refunding bonds.
The $300 million 2008 election tax-exempt Series G GOs were priced to yield from 0.25% in 2016 with a 2% coupon to 3.42% with a 4% coupon in 2039. The $1.497 billion tax-exempt Series A GO refunding bonds were priced to yield from 0.25% with a 3% coupon in 2016 to 3.19% with a 4% coupon in 2033. The issue is rated Aa1 by Moody's Investors Service and AA-plus by Standard & Poor's.
JPMorgan Securities priced the Massachusetts Clean Water Trust's $228.355 million green bonds. The Series 18 non-AMT state revolving fund bonds were priced to yield from 0.17% with a 2% coupon in 2016 to 3.04% with a 5% coupon in 2045. The issue is rated triple-A by Moody's, S&P and Fitch Ratings.
In the competitive arena, J.P. Morgan Securities apparently won the $200 million Baltimore County, Md., metropolitan district and consolidated public improvement bonds with a true interest cost of 3.0093%.
The $84 million metropolitan district bonds were priced to yield from 0.13% with a 2% coupon in 2015 to 2.92% with a 5% coupon in 2044. The $116 million consolidated public improvement bonds were priced to yield from 0.32% with a 4% coupon in 2016 to 2.64% with a 5% coupon in 2034. The issue is rated triple-A by Moody's, S&P and Fitch.
Secondary Market
High-grade municipal bond prices were unchanged to slightly higher on Wednesday. The yield on the benchmark 10-year general obligation was unchanged from 2.02% on Tuesday while the yield on 30-year GOs dropped as much as one basis point from to 2.92% on Tuesday, according to a midday read of Municipal Market Data's triple-A scale.
Treasury prices were higher, with the two-year note yield declining to 0.59% from 0.62% on Tuesday. The 10-year yield dropped to 2.20% from 2.22% while the 30-year decreased to 2.85% from 2.87% on Tuesday.
The 10-year muni-to-Treasury ratio closed on Tuesday at 91.0% versus 91.7% on Monday; the 30-year muni to Treasury ratio closed at 101.5%, compared with 102.0% on Monday.
Puerto Rico Trading
The Bond Buyer reported on Wednesday that Puerto Rico Gov. Alejandro García Padilla hasn't yet decided whether he will sign oil tax rise legislation approved by the legislature. Along with increasing taxes on imported oil, the bill would allow the Puerto Rico Infrastructure Finance Authority sell up to $2.9 billion of bonds to support the Puerto Rico Highways and Transportation Authority.
"Flies in the ointment are an interest rate cap of 8.5% and a price floor of 93 included in the legislation, limiting the yield," writes Alan Schankel, managing director at Janney Capital Markets. "With these constraints, a 10-year bond would yield 9.64%, a 20-year bond 9.28% and a 30-year bond 9.19%. PR GO 8% of 2035, issued in March, have been trading at yields in the 9.60% area recently, so it seems unlikely that these constraints would allow marketing at a yield sufficient to attract investors."
Looking at recent market activity, Puerto Rico HTA Series N 5 1/4s of 2036 traded 14 times on Wednesday on volume of $2.440 million with a high/low price of 103.781/101.747 and a high/low yield of 5.115%/4.962%, according to the Municipal Securities Rulemaking Board's EMMA website. In contrast, on Monday the bonds traded nine times on volume of $6.015 million with a high/low price of 101.50/97.863 and a high/low yield of 5.419%/5.133%.
Puerto Rico HTA 5 1/4s Series N of 2039 traded 10 times on Tuesday on volume of $1.455 million with a high/low price of 70.00/67.806 and a high/low yield of 8.355%/8.077%, according to EMMA. In contrast, on Monday the bonds traded four times on volume of $440,000 with a high/low price of 68.75/68.15 and a high/low yield of 8.311%/8.234%.
The HTA 4.95s Series AA of 2026 traded two times on Tuesday, on volume of $200,000 with a high/low price of 100.75/100.50 and a high/low yield of 4.845%/4.794%. The bonds traded on Friday six times on volume of $180,000 with a high/low price of 100.00/99.25 and a high/low yield of 5.036%/4.949%, according to EMMA.
The HTA 5 1/4s Series CC of 2036 traded four times on Tuesday on volume of $55,000 with a high/low price of 100.769/97.096 and a high/low yield of 5.481%/5.19%. The bonds traded on Monday four times on volume of $25,000 with a high/low price of 101.487/99.375 and a high/low yield of 5.299%/5.135%.
The HTA 5 1/4s Series L of 2038 traded on Tuesday five times on volume of $320,000 with a high/low price of 94.202/91.10 and a high/low yield of 5.958%/5.701%. The bonds traded on Monday 17 times on volume of $640,000 with a high/low price of 94.402/89.75 and a high/low yield of 6.073%/5.684%.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 38,993 trades for Tuesday on volume of $11.487 billion. Most active, based on the number of trades, was the New Jersey Transportation Trust Fund Authority transportation program bonds, Series AA 4 1/4s of 2044, which traded 138 times with an average price of 100.059 and an average yield of 4.212%.
