After a day filled with new deals, the municipal bond market will see another session of supply on Wednesday with big offerings from Pennsylvania and Arizona on tap.

Traders will also be keeping an eye on yields, which have been trending downward as of late.

Secondary market
U.S. Treasuries were weaker on Wednesday. The yield on the two-year Treasury rose to 1.18% from 1.16% on Tuesday, while the 10-year Treasury yield gained to 2.20% from 2.18%, and the yield on the 30-year Treasury bond increased to 2.87% from 2.84%.

Top-rated municipal bonds finished stronger on Tuesday. The yield on the 10-year benchmark muni general obligation fell five basis points to 2.02% from 2.07% on Monday, while the 30-year GO yield dropped five basis points to 2.86% from 2.91%, according to the final read of Municipal Market Data's triple-A scale.

On Tuesday, the 10-year muni to Treasury ratio was calculated at 92.9% compared with 91.6% on Monday, while the 30-year muni to Treasury ratio stood at 100.8%, versus 100.0%, according to MMD.

MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 42,704 trades on Tuesday on volume of $11.04 billion.

Primary Market
On Wednesday, Barclays Capital is set to price the Pennsylvania State University’s $284.77 million of Series 2017A tax-exempt and Series 2017B taxable bonds.

Market sources said a premarketing scale on the deal was released on Tuesday.

The $159.77 million of Series 2017A tax-exempts were premarketed to yield from 1.07% with a 4% coupon in 2019 to 3.02% with a 5% coupon in 2037; a 2042 maturity was premarketed as 5s to yield 3.11% and a 2047 maturity was premarketed as 5s to yield 3.16% with the 2018 maturity being offered as a sealed bid.

Sources said the $125 million of Series 2017B taxables were premarketed to yield from about 30 basis points over the comparable Treasury security in 2019 to about 120 basis points over the comparable Treasury security in 2032 and about 80 basis points over the comparable Treasury security in 2037 and about 95 basis points over the comparable Treasury security in 2047 with the 2018 maturity being offered as a sealed bid.

The deal is rated Aa1 by Moody’s Investors Service and AA by S&P Global Ratings.

Bank of America Merrill Lynch is expected to price the UAB Medicine Finance Authority, Ala.'s $190 million of Series 2017 B1 and B2 revenue bonds.

The deal is rated A1 by Moody's.

D.A. Davidson & Co. is expected to price the Centerra Metro District No. 1, Colo.'s $187.53 million of tax-exempt revenue bonds.

Raymond James & Associates is set to price the Fresno Joint Powers Financing Authority, Calif.'s $148.57 million of lease revenue refunding and taxable bonds.

The deal is rated A2 by Moody's and AA by S&P.

Morgan Stanley is scheduled to price the city of Cape Coral, Fla.’s $103.4 million of utility improvement refunding assessment bonds.

The deal is rated A2 by Moody’s and BBB-plus by S&P.

Since 2007, the city has issued $872 million of debt, with the most issuance occurring in 2011 when it sold $299 million. The city did not come to market at all in 2008, 2012 through 2014 or 2016.

In the competitive arena on Wednesday, the town of Gilbert, Ariz., is selling $124.61 million of Series 2017 general obligation and GO refunding bonds.

The deal is rated triple-A by Moody’s and Fitch and AA-plus by S&P.

Bond Buyer visible supply
The Bond Buyer's 30-day visible supply calendar decreased $40.7 million to $14.46 billion on Wednesday. The total is comprised of $3.85 billion of competitive sales and $10.61 billion of negotiated deals.

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Chip Barnett

Chip Barnett

Chip Barnett is a journalist with more than 40 years of experience. Barnett is currently Senior Market Reporter for The Bond Buyer.
Aaron Weitzman

Aaron Weitzman

Aaron Weitzman is a markets reporter for The Bond Buyer, focusing on the sell side of the municipal bond market.