NEW YORK – Munis continued to weaken ahead of a large calendar, although the secondary market is seeing strong buy and sell activity.
“It’s a very strange market today,” said a trader in New York. “It started off buying, and now we are seeing good two-sided action with what looks like some dealers lightening up to make room for new deals.” He added the market is seeing motivated buyers and sellers.
Munis were weakening as yields rose across the board, according to the Municipal Market Data scale. Yields were steady inside two-years but rose up to two basis points on the four-year spot. The belly of the curve saw the biggest drop as yields rose between three and five basis points. Yields on the 10-year were up between two and four basis points while yields on 2023 and 2024 maturities rose up to three basis points. On the long end, yields increased up to two basis points.
On Monday, the two-year muni closed flat at 0.42% for the ninth consecutive trading session. The 10-year yield closed at 2.28% and the 30-year finished at 3.78%.
Treasuries headed in the opposite direction and inched up on the long end as yields fell. The 10-year and 30-year yields moved down one two basis points each to 2.02% and 3.06%, respectively. The two-year was up one basis point to 0.25%.
In the primary market, Bank of America Merrill Lynch priced for retail $1.265 billion of Hawaii general obligation bonds in five series. The credits are rated Aa2 by Moody’s Investors Service and AA by Standard & Poor’s and Fitch Ratings.
Yields on the first series, $800 million of new money bonds, ranged from 1.43% with a 5% coupon in 2016 to 4.05% with a 4% coupon in 2031. Portions of bonds maturing in 2016, 2017, and between 2023 and 2031 were not offered for retail. The bonds are callable at par in 2021.
Yields on the second series, $383.4 million of refunding bonds, ranged from 1.43% with 2% and 4% coupons in a 2016 split maturity to 3.09% with a 3% coupon in 2023. Portions of bonds maturing in 2023 were not offered for retail. The bonds are callable at par in 2021.
The deal also included smaller series valued at $56 million, $23 million and $2.8 million.
Bank of America Merrill Lynch also priced for retail $529.2 million of Arizona Transportation Board subordinated highway revenue bonds, rated Aa2 by Moody’s and AA-plus by Standard & Poor’s.
Yields ranged from 0.67% with a 3% coupon in 2013 to 4.17% with a 4% coupon in 2032. Debt maturing in 2012 was offered via sealed bid. Credits maturing in 2024, 2027 to 2031, and 2036 were not offered for retail. The bonds are callable at par in 2021.
Barclays Capital priced for institutional investors $450 million of New York City Municipal Water Finance Authority water and sewer revenue bonds. The bonds are rated Aa2 by Moody’s and AA-plus by Standard & Poor’s and Fitch.
Debt with 4.125% and 5% coupons in a 2039 split maturity yielded 4.25%. A split 2044 maturity with 5% and 5.25% coupons yielded 4.43% and 4.33%, respectively. The bonds are callable at par in 2021.
Citi priced for retail $395 million of Puerto Rico Sales Tax Financing Corp. sales tax revenue bonds in two series. The bonds are rated A1 by Moody’s and A-plus by Standard & Poor’s and Fitch.
Bonds on the first series, $353 million of first subordinate series bonds, yielded 5.15% with a 5.125% coupon in 2043.
There was also a second series of $42 million capital appreciation bonds.
Bank of America Merrill Lynch priced for retail $281.7 million of Omaha Public Power District electric system revenue bonds in two series. The debt is rated Aa1 by Moody’s and AA by Standard & Poor’s.
Yields on the first series, $139.2 million, ranged from 3.34% with a 3.25% coupon in 2025 to 4.12% with a 4% coupon in 2036. Credits maturing in 2023, 2024, 2026, 2028, 2030, 2036, and 2042 were not offered for retail. The bonds are callable at par in 2021.
Yields on the second series, $142.5 million, ranged from 0.41% with a 2% coupon in 2013 to 2.75% with a 5% coupon in 2022. Credits maturing between 2023 and 2030 were not offered for retail. The bonds are callable at par in 2021.
Siebert Brandford Shank & Co. priced $269.6 million of North Texas Tollway Authority System first tier revenue refunding bonds. The bonds are rated A2 by Moody’s and A-minus by Standard & Poor’s.
Yields ranged from 3.02% with a 5% coupon in 2019 to 5.12% with a 5% coupon in 2038. The bonds are callable at par in 2021.
First Southwest priced $238.8 million of Austin water and wastewater system revenue refunding bonds. The bonds are rated Aa2 by Moody’s, AA by Standard & Poor’s and AA-minus by Fitch.
Yields ranged from 0.94% with a 2% coupon in 2014 to 4.30% with a 5% coupon in 2041. The bonds are callable at par in 2021.
Barclays Capital priced $235 million of government of Guam business privilege tax bonds, rated A by Standard & Poor’s and A-minus by Fitch.
A portion of the 2017 split maturity was priced at par to yield 2.55%. Other yields ranged from 2.55% with a 5% coupon in 2017 to 5.125% priced at par in 2042. The bonds are callable at par in 2022.
RBC Capital Markets priced $214.3 million of Indiana Finance Authority hospital revenue bonds. The bonds are rated A1 by Moody’s, A-plus by Standard & Poor’s and AA-minus by Fitch.
Yields ranged from 1.23% with a 3% coupon in 2013 to 5.08% with a 5% coupon in 2031. Debt maturing in 2012, 2031, and 2038 was not offered for retail. The bonds are callable at par in 2021.
