The municipal market had a stronger tone on Wednesday following the release of first quarter gross domestic product, which was revised down 1.9 points to its biggest loss since the first quarter of 2009, a 2.9% contraction.
"The GDP number came in at a number that was weaker than expected," a trader in New York said. "A lot of people expected the number to be redone at a lower level. It puts growth into perspective; it's 3 percent weaker."
Munis strengthened Wednesday afternoon, as yields on bonds maturing in two to three years fell as much as two basis points, while yields maturing in four to five years slipped between one and three basis points. Yields on bonds maturing beyond 2021 lost between two and four basis points. The front end of the curve was steady.
"The Treasury market is reacting and muni estimates on the MMD yield scale show that prices have gone up and yields have gone down," the New York trader said. "The tone of the market is just a bit stronger. This paints a picture that the hole we dug ourselves in is going to take a while to get out of."
Treasuries were mixed Wednesday afternoon, with the 30-year yield and the 10-year benchmark yield dropping four basis points each to 3.37% and 2.55%, respectively. The two-year note rose three basis points to 0.49%.
Following the announcement by Puerto Rico Governor Alejandro Garcia Padilla about proposed legislation that would enable public corporations to restructure debt, traders said "yields are up pretty dramatically" on PREPA bonds.
The $1.1 billion Washington state general obligation deal sold Wednesday. Citigroup Global Markets won the bid for $420.2 million of GOs. Yields ranged from 0.11% with a 2% coupon in 2015 to 2.81% with a 5% coupon in 2026. The bonds are callable at par in 2024.
Bank of America won the bid for about $419 million of GOs. Yields ranged from 0.20% with a 5% coupon in 2015 to 2.88% with a 4% coupon in 2025. The bonds are callable at par in 2024.
Bank of America won the bid for $207 million of GOs. Yields ranged from 2.63% with a 5% coupon in 2025 to 3.51% with a 5% coupon in 2039. The bonds are callable at par in 2024.
JP Morgan Securities won the bid for $86 million of GOs. No further details were available at press time.
The deal received a Aa1 rating from Moody's Investors Service, and AA-plus from Standard & Poor's and Fitch Ratings.
"I'm interested in seeing how Washington competes," a trader in Florida said earlier in the week. "It should garner some interest but will be a good test for the market."
The week is packed with large deals from well-known issuers like the $1.4 billion Los Angeles tax and revenue anticipation notes scheduled to price on Thursday, and the $1.16 million New York State Dormitory Authority personal income tax revenue bonds that were auctioned on Tuesday.
Jefferies will bring a two-fold deal totaling $500 million of general obligation bonds for the commonwealth of Massachusetts. The deal consists of SIFMA floating rate notes with a step-up date on June 1, 2016, for one and June 1, 2017, for the other, at an 8% rate. The deal is rated Aa1 by Moody's, and AA-plus by both S&P and Fitch.
JP Morgan will sell $250 million of Jacksonville Electric Authority water and sewer revenue bonds. The deal is rated Aa2 by Moody's and AA by both S&P and Fitch.
JP Morgan will bring $250 million of a two-fold deal totaling $508.9 million of Texas Public Finance Authority refunding general obligation bonds. The $258.9 million part of the deal was priced on Tuesday. The entire deal is triple-A rated by Moody's Investors Service, Standard & Poor's and Fitch Ratings.
Piper Jaffray priced $475 million of Idaho tax anticipation notes on Wednesday. The short-term deal has a 0.11% yield with a 2% coupon. The deal received a MIG 1 rating from Moody's, SP-1-plus rating from S&P and a F1-plus rating from Fitch.
Citigroup Global Markets will bring $185.7 million of Michigan Finance Authority revenue bonds to the market on Wednesday. The bonds mature serially from 2015 to 2034, with term bonds in 2039 and 2044. The deal is not yet rated.
Citigroup Global Markets will price for institutions $178.1 million of Oregon Department of Transportation Highway User tax revenue bonds. A retail order period was held Tuesday. The deal is rated Aa1 by Moody's, AA by S&P and AA-plus by Fitch.
Stifel, Nicolaus and Co., will bring a two-fold deal totaling $177.5 million of Albuquerque Municipal School District No. 12 Bernalillo and Sandoval Counties, N.M., GOs and refunding bonds. The deal is not yet rated.
Raymond James & Associates will price $163.3 million of Arlington Independent School District, Texas, unlimited tax bonds. The bonds mature serially from 2015 to 2039 and are rated triple-A by Moody's and S&P.
Bank of America will bring $150.3 million of North Texas Municipal Water District revenue refunding and improvement bonds. The deal is rated Aa2 by Moody's and AAA by S&P.
Morgan Stanley will offer $117.7 million of Dallas and Fort Worth Texas International Airport joint revenue improvement bonds. The deal is rated A-plus by S&P, A by Fitch and A-plus/A by Kroll Bond Rating Agency.
The New York City Municipal Water Finance Authority will sell $200 million of water and sewer system second general resolution revenue bonds.
