The municipal bond market is still steady as a slew of new issues hit the primary market on Wednesday including several deals of good size, which traders said were priced attractively.
Market participants say next week's holiday-shortened trading week was a big factor in the deals being priced to move.
"After this week, there's very little supply," says a trader in Texas. "There will be only a little window of opportunity for new deals to be priced after Thanksgiving and before the end of the year."
Primary
Two separate issues from Virginia totaling about $385 million came to market along with a $377 million deal from a Texas issuer. Various other offerings of size were also priced.
JP Morgan Securities won the $272.87 million Virginia Transportation Board transportation capital project revenue bonds with a true interest cost of 3.3812%. The bonds were priced to yield from 0.11% with a 2% coupon in 2015 to 3.70% with a 4% coupon in 2039. The issue is rated Aa1 by Moody's Investors Service and AA-plus by Standard & Poor's and Fitch Ratings.
Rice Financial Products priced the Virginia Small Business Financing Authority $111.555 million refunding revenue bonds to yield from 0.59% with a 3% coupon in 2015 to 4.22% with a 4% coupon in 2038. The bonds, issued for Hampton University, are rated A-minus by S&P.
The Dallas Area Rapid Transit District $377.77 million transit bonds were priced by JPMorgan. The bonds were priced to yield from 0.75% with a 3% coupon in 2017 out to split 2036 maturities which carry a 4% coupon to yield 3.55% and a 5% coupon to yield 3.24%. The bonds are rated Aa2 by Moody's and AA-plus by S&P.
Secondary
Municipal bond yields were steady, with both the benchmark 10-year GO and the 30-year GO unchanged at 2.20% and 3.10%, respectively, according to the midday read of Municipal Market Data's triple-A scale.
"The market's at pretty much the same levels," said a trader in Texas.
On Tuesday, munis were outperformed by Treasuries. The 10-year muni to Treasury ratio closed higher at 94.8% (from 93.6% on Monday) and the 30-year muni to Treasury ratio closed higher at 101.6% (from 101% on Monday.) The ratio is calculated by taking the yield on a triple-A rated muni and comparing it to the yield on a Treasury of the same maturity. The higher the ratio, the more attractive munis are to Treasuries.
"Muni to Treasury ratios are up about 10% in the 10-year area, which given falling supply, represents a good entry point," Janney Capital Markets says in its latest fixed-income strategy and research report.
Treasury prices were higher with the two-year note yield down one basis point at 0.54% from Tuesday's market close. The 10-year yield lost nine basis points to 2.35% and the 30-year fell 13 basis points to 3.06%.
