There's no rest for the weary on Wednesday as the municipal bond market prepares to take on another day of heavy volume. Over $3 billion of supply hit the market on Tuesday, with traders saying there was good demand for the new issues.
Meanwhile, Federal Reserve Chair Janet Yellen will finish up her semi-annual monetary policy report to Congress when she testifies before the House Financial Services Committee.
Primary Market
The state of Nevada will be in the competitive arena on Wednesday, putting three separate issues totaling $291 million up for bids.
The Silver State will sell $196 million Series B limited tax GO capital improvement and cultural affairs refunding bonds, $74 million Series A limited tax GO university system revenue supported projects bonds, and $21 million Series C limited tax GO natural resources refunding bonds.
All three issues carry ratings of Aa2 by Moody's Investors Service, AA by Standard & Poor's and AA-plus by Fitch Ratings.
Nevada was last in the market on June 3, 2014, when it competitively sold $29.85 million of limited tax taxable GO subordinate revenue supported refunding bonds. J.P. Morgan won the bonds with a TIC of 4.0821%.
On Tuesday, Loop Capital Markets priced the biggest deal of the week -- Atlanta, Ga.'s $1.245 billion of water and wastewater revenue refunding bonds.
"The city recently completed an investor roadshow for the transaction and we were pleased with the level of interest in this offering," said James Beard, Atlanta's finance director.
The bonds were priced to yield from 0.48% with a 2% coupon in 2016 to 3.32% with a 5% coupon in 2035; a 2040 term bond was priced as 5s to yield 3.38% and a 2043 term was priced as 5s to yield 3.41%.
Last month, Standard & Poor's raised the rating on the city's $3 billion of outstanding water and sewer revenue bonds to AA-minus from A-plus. S&P also assigned the AA-minus rating to the refunding, with a stable outlook. S&P cited the city's strong financial performance, high liquidity, and a large pay-as-you-go capital program.
Fitch assigned an A-plus rating to the issue and revised the outlook to positive from stable, citing improving financial metrics, cost controls, and relatively stable sales at the Department of Watershed Management, which oversees the wastewater program.
Moody's assigned an Aa3 rating with a stable outlook to the deal.
Proceeds will be used to refund about $231 million of 2001A bonds, $479 million of 2004 bonds, and $596 million of 2009A bonds. Beard said savings from the transaction will be invested in completing projects necessary for the operation and maintenance of the system.
On Tuesday, Wells Fargo Securities priced the New York City Transitional Finance Authority's $700.5 million of tax-exempt fixed-rate refunding bonds for retail investors. The deal will be priced for institutions on Wednesday.
The $655.8 million future tax secured tax-exempt subordinate bonds, Fiscal 2015 Series C, were priced to yield from 0.70% with a 4% coupon in 2017 to 3.25% with a 3.25% coupon in 2031; a 2016 maturity was offered as a sealed bid.
The $44.7 million future tax secured tax-exempt subordinate bonds, Fiscal 2015 Series D, were priced to yield from 0.70% in 2017 with a 4% coupon to 2.71% with a 4% coupon in 2027; the 2015 and 2016 maturities were offered as sealed bids.
The bonds are rated Aa1 by Moody's and triple-A by S&P and Fitch.
Secondary Market
Treasury prices were mixed on Wednesday. The yield on the two-year Treasury note rose to 0.61% from 0.56% on Tuesday while the 10-year yield increased to 1.99% from 1.98% and the 30-year yield slipped to 2.59% from 2.60%.
On Tuesday, prices of top-quality municipal bonds rose slightly. The yield on the 10-year benchmark muni general obligation was down one basis point to 2.07% from 2.08% on Monday, while the yield on 30-year GO was off one basis point to 2.87% from 2.88%, according to the final read of Municipal Market Data's triple-A scale.
Since the start of the month, yields have been on the upswing after falling to near record low levels in January. Since Feb. 1, yields on the 10-year year are up by 33 basis points while yields on the 30-year are up by 37 basis points. However, since Jan. 1, yields on the 10-year are up only six basis points and yields on the 30-year are up by only four basis points.
The 10-year muni to Treasury ratio was calculated at 104.3% on Tuesday versus 101.0% on Monday, while the 30-year muni to Treasury ratio stood at 110.6% compared to 108.3%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $962.7 million to $12.334 billion on Wednesday. The total is comprised of $3.250 billion competitive sales and $9.084 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 41,820 trades on Tuesday on volume of $8.154 billion.
Most active on Tuesday, based on the number of trades, was the Winnebago and Boone Counties, Ill., School District No. 205's 2015 Series B 4s of 2035, which traded 142 times at an average price of 101.246, with an average yield of 3.832%.
