The municipal bond market is awaiting Wednesday's slew of new primary market issuance, which is topped off by more than $1 billion of debt from an issuer in the Lone Star State.
Bank of America Merrill Lynch is set to price the Texas Transportation Commission's $1.6 billion general obligation mobility fund bonds, a combination of new money and refunding. The issue is rated triple-A by Moody's Investors Service, Standard & Poor's and Fitch Ratings.
Primary Market
Among the other top negotiated deals scheduled for pricing Wednesday are:
- Phoenix Civic Improvement Corp.'s $610 million junior lien water system revenue bonds, to be priced by Bank of America Merrill Lynch.
- Long Island Power Authority's $440 million electric system general revenue bonds, to be priced by Bank of America Merrill Lynch. LIPA will also offer $251 million taxable electric system general revenue bonds, to be priced by Barclays Capital.
- Advocate Health Care Network, Ill.'s $304 million serial bonds to be priced by J.P. Morgan Securities.
- On Tuesday, Goldman, Sachs & Co priced $740.7 million New York State Thruway Authority general revenue refunding bonds for retail investors. The bonds were priced to yield 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 and A by S&P.
- Wells Fargo Securities on Tuesday priced for retail $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% 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.
On the competitive sale calendar for Wednesday are:
- $525 million New Jersey general obligation bonds.
- $140 million Los Angeles MTA, Calif., revenue bonds.
Secondary Market
Treasury prices were little changed in early trading, as the two-year note yield rose to 0.54% from 0.53% on Tuesday. The 10-year yield increased to 2.29% from 2.28% while the 30-year was unchanged at 3.00% from Tuesday.
High-grade municipal bond prices were weaker on Tuesday, with the yield on the benchmark 10-year general obligation up two basis points to 2.08% from 2.06% at Monday's close while the yield on 30-year GOs rose three points to 3.02% from 2.99% on Monday, according to the final read of Municipal Market Data's triple-A scale.
On Tuesday, the 10-year muni-to-Treasury ratio closed at 91.1% versus 92.8% on Monday. The 30-year muni to Treasury ratio closed at 100.6%, compared with 101.1% 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.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 40,799 trades on Tuesday for volume of $8.458 billion.
Most active on Tuesday, based on the number of trades, were New Jersey State Trust Fund Authority Transportation Program 2014 Series AA 4¼s of 2044 which traded 264 times with an average price of 99.233 for an average yield of 4.275%.
