Municipal bond traders will be keeping both eyes wide open on Wednesday — with one eye on new issue supply and the one on rising bond yields.
Topping off Wednesday's new supply slate is the South Carolina Public Service Authority's $1.06 billion of revenue obligations.
On Wednesday, Treasury prices were mixed as geo-political and economic factors were driving price action. On Tuesday, prices of top-rated municipal bond prices were weaker, with the yield on the 10-year benchmark muni general obligation rising above 2%, according to the Municipal Market Data's triple-A scale.
Primary Market
Barclays Capital is slated to price South Carolina PSA's revenue obligations for Santee Cooper on Wednesday.
From 2004 through 2014, about $9.1 billion of debt was issued for Santee Cooper, with new money accounting for $4 billion, refundings making up $2.5 billion, and combined refundings and new money totaling $2.6 billion. The largest sales occurred in 2013 and 2014, with more than $1 billion of bonds issued in each of those years.
Also on tap are the $300 million Pennsylvania Higher Education Facilities Authority's fixed-rate revenue bonds for the Thomas Jefferson University to be priced by Bank of America Merrill Lynch on Thursday after a one-day retail order period on Wednesday.
And the Maryland Department of Transportation plans a competitive sale of $280 million consolidated transportation bonds on Wednesday.
Secondary Market
Treasury prices were mixed on Wednesday. The two-year note yield was flat from 0.65% on Tuesday, while the 10-year yield increased to 1.99% from 1.98% and the 30-year yield rose to 2.57% from 2.56%.
On Tuesday, the yield on the muni 10-year GO rose by six basis points to 2.02% from 1.96% on Monday, while the yield on 30-year GOs increased seven basis points to 2.84% from 2.77% according to the final read of MMD's triple-A scale.
Since the start of the month, the yield on the muni 10-year benchmark general obligation is up by 28 basis points, while yield on the 30-year GO is 34 basis points higher, according to MMD.
The 10-year muni to Treasury ratio was calculated at 101.6% on Tuesday from 100.9% on Monday, while the 30-year muni to Treasury ratio stood at 110.5 compared to 110.1%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar fell $1.103 billion to $9.718 billion on Wednesday. The total is comprised of $2.065 billion competitive sales and $7.652 billion of negotiated deals.
MSRB Reports Previous Session's Activity
The Municipal Securities Rulemaking Board reported 36,795 trades on Tuesday on volume of $8.563 billion. Most active on Tuesday, based on the number of trades, was the Wayne County Building Authority, Mich., 2010 taxable jail 10s of 2040, which traded 198 times with an average price of 97.403, an average yield of 10.287%.
