The municipal bond market is shaking itself out of holiday mode as the primary gears up and sees some action with a big competitive sale on tap and two large issues priced for retail investors. High-quality municipal bond prices were weaker at midday.
Primary Market
Two big deals were priced for retail investors ahead of this afternoon's competitive sale of $1.3 billion Empire State Development Corp. personal income tax bonds.
Goldman, Sachs priced for retail investors $740.7 million New York State Thruway Authority general revenue refunding bonds. The bonds were priced for retail as serials yielding from 1.17% with a 3% coupon in 2019 to 3.52% yield with a 3.5% coupon and a 3.21% yield with a 5% coupon in a 2032 split maturity. The issue is rated A2 by Moody's Investors Service and A by Standard & Poor's.
Also, Wells Fargo Securities priced for retail the $742.5 million Miami-Dade County, Fla., aviation revenue refunding bonds, AMT and non-AMT. The $602.34 million AMT bonds were priced to yield from 0.76% with a 5% coupon in 2016 to 3.46% with a 5% coupon in 2029. The $140.115 million non-AMT bonds were priced to yield from 0.64% with a 4% coupon in 2016 to 3.16% with a 5% coupon in 2029. The issue is rated A2 by Moody's and A by S&P and Fitch Ratings.
Meanwhile, the market awaits the results of the bidding on three series of Empire State Development Corp. bonds. The issues up for bid include $372 million taxable state personal income tax revenue bonds and $424 million Group A and $515 million Group B state personal income tax revenue bonds. The issue is rated triple-A by S&Ps and AA-plus by Fitch Ratings.
Secondary Market
High-grade municipal bond prices were weaker at mid-session with the benchmark 10-year general obligation yield up as much as two basis points from 2.06% at Monday's close and 30-year GOs up by as much as two basis points from 2.99% on Monday.
Treasury prices were lower, with the two-year note yield at 0.53% from 0.49% on Monday. The 10-year yield was at 2.27% from 2.22% while the 30-year was at 2.98% from 2.95% on Monday.
On Monday, the 10-year muni-to-Treasury ratio closed at 92.8% versus 95.6% on Friday. The 30-year muni to Treasury ratio closed at 101.4%, compared with 104.0% on Friday. 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.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 33,812 trades on Monday for volume of $8.850 billion. Most active on Monday, based on the number of trades, were the New Jersey State Trust Fund Authority's transportation program's 2014 Series AA 4¼s of 2044 which traded 153 times with an average price of 99.396 for an average yield of 4.279%.
