The municipal bond market on Thursday will be digesting as much as $8 billion of new supply that came to market on Wednesday while a few large deals are left on this week's calendar.
Investor demand for the new issues was strong, several market participants reported.
High-grade municipal bonds were unchanged in the face of the avalanche of new issuance, according to Municipal Market Data.
Thursday's Primary Market
- Nassau County, N.Y., is selling $238.865 million of general improvement bonds in the competitive arena. The bonds are rated A2 by Moody's Investors Service, A-plus by Standard & Poor's and A by Fitch.
- RBC Capital markets is slated to price the state of Ohio's $219 million infrastructure projects revenue bonds. The issue is rated Aa2 by Moody's and double-A by S&P.
- Raymond James & Associates is slated to priced $129 million Louisiana Local Government Environmental Facilities and Community Development Authority's serial bonds. The issue is rated AA-minus by S&P and Fitch.
- Bank of America Merrill Lynch is scheduled to priced $96 million Build New York City Resource Corp. solid waste disposal revenue bonds for Pratt Paper.
- The Harris County-Houston Sports Authority, Texas, $569 million senior lien revenue refunding bonds, taxable senior lien revenue refunding bonds and second lien revenue refunding bonds, could be priced by Morgan Stanley as early as Thursday.
Wednesday's Primary Market
- Bank of America Merrill Lynch won New Jersey's $525 million general obligation bonds with a true interest cost of 3.3190%. The bonds were priced as serials to yield from 0.375% with a 5% coupon in 2016 to 3.73% with a 4% coupon in 2035. The issue is rated A1 by Moody's and A by S&P and Fitch.
- Bank of America Merrill Lynch priced the Texas Transportation Commission's $1.845 billion general obligation mobility fund bonds, a combination of new money and refunding. The $1.595 billion Series 2014A bonds were priced to yield from 0.65% with a 5% coupon in 2017 to 3.22% with a 5% coupon in 2044. The $250 million Series 2014B SIFMA Index floating rate bonds were priced to yield 38 basis points above the SIFMA Index in a bullet maturity of 2041 with a mandatory tender date in 2018 and an optional call in 2018. The issue is rated triple-A by Moody's, S&P and Fitch.
- Goldman, Sachs & Co. priced for institutions $740.74 million New York State Thruway Authority general revenue refunding bonds after the retail pricing on Tuesday. The bonds were priced to yield from 1.17% with a 3% coupon in 2019 to 3.52% with a 3.50% coupon and 3.20% with a 5% coupon in a 2032 split maturity. The issue is rated A2 by Moody's and A by S&P except for the 2028 and 2031 maturities which are insured by Assured Guaranty Municipal Corp. and rated A2 by Moody's and double-A by S&P.
- Bank of America Merrill Lynch priced the Phoenix Civic Improvement Corp.'s $600 million junior lien water system revenue bonds. The $153.89 million Series 2014A bonds were priced to yield from 1.13% with a 2% coupon in 2019 to 3.37% with a 4.75% coupon in 2044. The $446.21 million Series 2014B bonds were priced to yield from 0.30% with a 5% coupon in 2016 to 3.03% with a 4% coupon in 2029.The bonds are rated Aa2 by Moody's and triple-A by S&P.
Secondary Market Trading
Treasury prices were higher on Thursday, with the two-year note yield off to 0.54% from 0.55% on Wednesday. The 10-year yield decreased to 2.26% from 2.29% while the 30-year slipped to 2.97% from 2.99% on Wednesday.
On Wednesday, the secondary market took a back seat to the primary, with high-grade municipal bond prices remaining flat. The yield on the benchmark 10-year general obligation was unchanged at 2.08% from Tuesday's close while the yield on 30-year GOs was also flat at 3.02% from Tuesday, according to the final read of Municipal Market Data's triple-A scale.
On Wednesday, the 10-year muni-to-Treasury ratio closed at 91.1% versus 91.1% on Tuesday; the 30-year muni to Treasury ratio closed at 101.0%, compared with 100.6% on Tuesday.
Puerto Rico Trading
On Wednesday, the FBI charged the Puerto Rico Highways and Transportation Authority treasurer with accepting bribes, only a day after the commonwealth's House of Representatives passed a bill backing a $2.9 billion bond, the first stage in a process that would support the authority's shaky finances.
- Looking at market activity on Wednesday, Puerto Rico HTA 5 1/4s of 2039 traded 20 times on Wednesday on volume of $780,000 with a high/low price of 68.665/68.069 and a high/low yield of 8.321%/8.244%, according to the Municipal Securities Rulemaking Board's EMMA website. In contrast, on Tuesday the bonds traded nine times on volume of $635,000 with a high/low price of 69.625/67.065 and a high/low yield of 8.452%/8.123%.
- Puerto Rico HTA 4.95s of 2026 traded 12 times on Wednesday, on volume of $360,000 with a high/low price of 102.128/100.126 and a high/low yield of 4.923%/4.513%. The bonds traded on Tuesday seven times on volume of $375,000 with a high/low price of 102.128/98.397 and a high/low yield of 5.135%/4.513%, according to EMMA.
- The HTA 5 1/4s of 2036 traded seven times on volume of $415,000 with a high/low price of 100.899/98.49 and a high/low yield of 5.369%/5.18%. The bonds traded on Tuesday three times on volume of $15,000 with a high/low price of 98.75/94.75 and a high/low yield of 5.675%/5.348%.
- The HTA 5 1/4s of 2038 traded six times on volume of $115,000 with a high/low price of 93.586/89.366 and a high/low yield of 6.107%/5.75%. The bonds traded on Tuesday 11 times on volume of $750,000 with a high/low price of 94/89.564 and a high/low yield of 6.089%/5.716%.
- The HTA 4s of 2015 traded four times on volume of $4,000,000 with a high/low price of 89/97.8 and a high/low yield of 28.945%/26.206%. The bonds last traded on Nov. 21 three times on volume of $30,000 with a high/low price of 95.373/94.623 and a high/low yield of 13.661%/12.253%, according to EMMA.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 44,152 trades on Wednesday for volume of $13.603 billion.
Most active on Wednesday, based on the number of trades, were the New Jersey State Trust Fund Authority Transportation Program's 2014 Series AA 4 ¼s of 2044 which traded 212 times with an average price of 99.323 for an average yield of 4.284%.
