The municipal bond market on Wednesday is watching the New York City Transitional Finance Authority issue, which has been priced for institutions.
Prices of top-rated municipal bonds were substantially stronger at mid-session, according to traders, buttressed along with Treasuries by the release of a weak December retail sales report.
Ramirez & Co. priced the TFA's $750 million of building aid revenue bonds for institutions after a two-day retail order period to yield from 0.59% with a 4% coupon in 2017 to 2.90% with a 5% coupon in 2037. A 2043 term bond was priced as 5s to yield 2.96% while a 2044 term was priced as 4s to yield 3.31%. A 2016 maturity was offered as a sealed bid.
The BARBs were priced for retail investors on Monday with a top yield of 3.36% in 2044 and on Tuesday with a top yield of 3.32% in 2044.
The bonds are rated Aa2 by Moody's Investors Service and AA by Standard & Poor's and Fitch Ratings.
"We've been very pleased with the strong retail demand for this TFA building aid revenue bond sale, with over $353 million in orders from individual investors received as of mid-afternoon (on Tuesday), including over-subscriptions," said Eric Sumberg, spokesperson for New York City Comptroller Scott M. Stringer. "We expect strong institutional investor demand on Wednesday when we conclude the sale."
Primary Market
Morgan Stanley priced two general obligation bond issues totaling $119.95 million for the state of Texas Water Development Board's Economically Distressed Areas Program.
The $77.35 million taxable GO water financial assistance refunding bonds were priced in three series. The $44.645 million Series B1 taxables were priced to yield from 0.165% with a 3% coupon in 2015 to 3.576% with coupon of 3.576% in 2034; a 2043 term was priced at par to yield 3.726%. The $25.34 million Series B2 taxables were priced at par to yield 1.902% as a bullet maturity of 2023. The $7.365 million Series C1 taxables were priced at par to yield from 0.18% in 2015 to 2.571% in 2023.
The $42.595 million tax-exempt GO water financial assistance refunding bonds were priced in three series. The $6.435 million Series A1 bonds were priced to yield from 0.15% with a 2% coupon in 2015 to 0.69% with a 4% coupon in 2017. The $26.61 million Series A2 bonds were priced to yield 1.07% with a 2% coupon in a bullet maturity of 2018. The $9.55 million Series C2 bonds were priced to yield from 0.30% with a 3% coupon in 2015 to 2.72% with a 4% coupon in 2029.
All the bonds were rated triple-A by Moody's, S&P and Fitch.
Secondary Market
Prices of top-quality municipal bonds were stronger on Wednesday. The yield on the benchmark 10-year general obligation was down from three to five basis points from 1.84% on Tuesday, while the yield on 30-year GOs was off from five to seven basis points from 2.62%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were higher on Wednesday, with the two-year note yield down to 0.48% from 0.53% on Tuesday. The 10-year yield fell to 1.82% from 1.89%, while the 30-year yield declined to 2.43% from 2.48%.
On Tuesday, the 10-year muni to Treasury ratio was at 97.6% compared to 96.3% on Monday, while the 30-year muni to Treasury ratio was at 105.7% versus 105.6%.
MSRB Reports Previous Session's Activity
The Municipal Securities Rulemaking Board reported 37,130 trades on Tuesday on volume of $9.921 billion. Most active on Tuesday, based on the number of trades, was the Savannah, Ga., Economic Development Authority's Savannah ALF LLC first mortgage revenue bond 7 1/4s of 01/2045, which traded 213 times with an average price of 100.00 and an average yield of 7.25%.
