The municipal bond market saw a slew of new supply priced in the primary on Tuesday, led by two big deals in the Lone Star State. About $12 billion in new bonds are scheduled to come to market this week, the bulk of which are set for sale on Tuesday and Wednesday.
High-quality muni bond prices were as much as five basis points higher at mid-session, according to Municipal Market Data.
Primary Market
Morgan Stanley priced the Harris County-Houston Sports Authority's $561.276 million tax-exempt and taxable senior lien revenue refunding bonds and second lien revenue refunding bonds.
The $347.83 million Series 2014 A tax-exempt senior lien revenue refunding current interest bonds were priced to yield from 1.26% with a 5% coupon in 2018 to 3.99% with a 5% coupon in 2053. The series is rated A2 by Moody's Investors Service and A-minus by Standard & Poor's except for the 2022-2027 maturities which are rated A2 by Moody's and double-A by S&P.
The $89.606 million Series A capital appreciation bonds were priced to yield from 4.80% in 5.02% in 2053. The CABs are insured by Assured Guaranty Municipal Corp. and rated A2 by Moody's and double-A (A-minus underlying) by S&P.
The $47.495 million Series 2014 B taxable senior lien revenue refunding bonds were priced to yield 70 basis points above Treasuries in 2016, 85 basis points above Treasuries in 2017, 75 basis points above Treasuries in 2018 with the 2015 maturity being offered via sealed bid. The bonds are rated A2 by Moody's and A-minus by S&P.
The $76.345 million Series 2014 C second lien revenue refunding bonds were priced to yield from 0.62% with a 2% coupon in 2015 to 3.86% with a 5% coupon in 2034. The bonds are rated A3 by Moody's and triple-B by S&P.
Elsewhere in Texas, Wells Fargo Securities priced Dallas' $531.66 million general obligation refunding and improvement bonds. The bonds were priced to yield from 0.23% with a 5% coupon in 2016 to 3.28% with a 4% coupon in 2034. A 2015 maturity was offered via sealed bid. The bonds are rated Aa1 by Moody's and AA-plus by S&P.
Bank of America Merrill Lynch priced the California Statewide Communities Development Authority's $549.505 million tax-exempt revenue bonds for the Loma Linda University Medical Center. The bonds were priced to yield from 4.23% with a 5.25% coupon in 2029 to 5% with a 5.50% coupon in 2054. The deal is rated triple-B by S&P and triple-B-minus by Fitch Ratings.
In other negotiated action, Bank of America Merrill Lynch priced the Northeast Ohio Regional Sewer District's $414.55 million wastewater improvement revenue and refunding bonds. The issue was priced as serials and terms to yield from 0.74% with a 4% coupon in 2017 to 3.52% with a 3.375% coupon in 2034. Top yields came in a split 2049 maturity that was priced at par to yield 4% and priced as 5s to yield 3.38%. The bonds are rated Aa1 by Moody's and AA-plus by S&P.
Secondary Market
High-grade municipal bond prices were higher. The yield on the benchmark 10-year general obligation lost from three to five basis points from Monday's close of 2.07% while the yield on 30-year GOs also dropped from three to as much as five basis points from 2.96% on Monday, according to a midday read of Municipal Market Data's triple-A scale.
Treasury yields were lower on Tuesday with the two-year note yield declining to 0.60% from 0.63% on Monday. The 10-year yield dropped to 2.21% from 2.25% while the 30-year decreased to 2.86% from 2.90% on Monday.
The 10-year muni-to-Treasury ratio closed on Monday at 91.7% versus 90.6% on Friday; the 30-year muni to Treasury ratio closed at 102.0%, compared with 101.2% on Friday.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 33,772 trades on Monday for volume of $7.444 billion. Most active on Monday, 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 155 times with an average price of 99.639 and an average yield of 4.256%.
