Municipal bond traders are seeing some of the week's biggest new issues come to market today as more than $2 billion of bonds were priced.
Prices of top-rated municipal bonds were lower at mid-session, according to traders.
Primary Market
In the competitive arena on Wednesday, Washington state offered four deals of general obligation bonds totaling more than $1 billion.
The $460.195 million various purpose GO refunding bonds were won by Bank of America Merrill Lynch with a true interest cost of 2.6686%. The Series R-2015E bonds were priced as 5s to yield 0.30% in 2015 and from 0.81% with a 5% coupon in 2018 to 2.65% with a 5% coupon in 2033.
The $282.275 million various purpose GOs were won by Morgan Stanley with a TIC of 3.3662%. No other information on the Series 2015B bonds was immediately available.
The $200.63 million vehicle fuel tax GOs were won by Bank of America Merrill Lynch with a TIC of 3.2649%. The Series 2015C bonds were priced as serials to yield from 0.15% with a 5% coupon in 2016 to 2.85% with a 5% coupon in 2040.
The $59.205 million taxable GOs were won by Wells Fargo Securities with a TIC of 1.5819%. No other information on the Series 2015T-2 taxables was immediately available.
All four issues are rated Aa1 by Moody's Investors Service and AA-plus by Standard & Poor's and Fitch Ratings.
In the negotiated sector, Barclays Capital priced the Texas Transportation Commission for the Central Texas Turnpike System's $1.616 billion revenue bonds.
The $225 million first tier revenue refunding put bonds, Series 2015A, were priced as 5s to yield 1.69% in 2042. The bonds, which have a mandatory put maturity in 2020, are rated A3 by Moody's and A-minus by S&P; Fitch is expected to rate the bonds A-minus.
The $227.130 million first tier revenue refunding bonds, Series 2015B, were priced as 5s to yield 3.05% in 2032 and 3.20% in 2037. The bonds are rated A3 by Moody's and A-minus by S&P; Fitch is expected to rate the bonds A-minus.
The $1.164 billion second tier revenue refunding bonds, Series 2015C, were priced to yield from 2.21% with a 5% coupon in 2022 to 3.44% with a 5% coupon in 2034; a 2037 term bond was priced as 5s to yield 3.46% and a 2042 term was priced as 5s to yield 3.54%. The bonds are rated Baa1 by Moody's and BBB-plus by S&P; Fitch is expected to rate the bonds BBB-plus.
Also today, JPMorgan priced East Bay Municipal Utility District, Calif.'s $442 million of water revenue bonds for retail investors. The bonds are priced to yield from 1.56% with a 4% coupon in 2023 to 2.18% with a 5% coupon in 2029; a 2035 maturity was priced as 5s to yield 2.46%. No retail orders were taken in the 2030-34 or 2036-37 maturities. The deal is rated Aa1 by Moody's, AAA by S&P and AA-plus by Fitch.
Secondary Market
Prices of high-quality municipal bonds were lower at midday, traders said.
The yield on the 10-year benchmark general obligation increased as much as two basis points from 1.76% on Tuesday, while the yield on 30-year GOs rose as much as two basis points from 2.54%, according to a read of MMD's triple-A benchmark scale.
Treasury prices were mixed, with the two-year note yield slipping to 0.48% from 0.49% on Tuesday. The 10-year yield was up to 1.83% from 1.80%, while the 30-year yield rose to 2.42% from 2.40%.
On Tuesday, the 10-year muni to Treasury ratio stood at 97.7% compared to 96.7% on Friday, while the 30-year muni to Treasury ratio was at 106.1% versus 104.5%. The ratio is calculated by taking the yield on a triple-A rated muni and comparing it to the yield on a Treasury of a similar maturity. The higher the ratio, the more attractive tax-exempts are to Treasuries. When used in combination with other measures, it can be a valuable tool for investors and fund managers in gauging the relative value of munis to other investments.
MSRB Reports Previous Session's Activity
The Municipal Securities Rulemaking Board reported 34,526 trades on Tuesday on volume of $6.110 billion. Most active on Tuesday, 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 78 times with an average price of 103.939 and an average yield of 3.748%.
