The municipal bond market on Wednesday is gearing up to take on the latest wave of new issuance as the Port Authority of New York & New Jersey deal is scheduled to be priced for institutions. The New York City Transitional Finance Authority, meanwhile, will hold a second day of orders for retail investors on its offering.
On Tuesday, prices of top-rated municipal bonds closed stronger with yields on some maturities falling two basis points.
Secondary Market
Treasury prices were mixed on Wednesday as the yield on the two-year Treasury note dropped to 0.50% from 0.51% on Tuesday, while the 10-year yield rose to 1.90% from 1.89% and the 30-year yield increased to 2.55% from 2.54%.
Prices of top-quality munis finished higher on Tuesday. The yield on the 10-year benchmark muni general obligation dropped two basis points to 1.95% from 1.97% on Monday, while the yield on the 30-year GO declined two basis points to 2.82% from 2.84%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated on Tuesday at 102.5% versus 101.8% on Monday, while the 30-year muni to Treasury ratio stood at 110.8% compared to 110.0%.
Primary Market
In the negotiated sector, Bank of America Merrill Lynch will price the Port Authority of New York & New Jersey's $775 million of consolidated bonds for institutions after it held a retail order period on Tuesday.
BAML priced the $125 million PANY/NJ's 188 Series consolidated alternative minimum tax bonds for retail to yield from 0.56% with a 5% coupon in 2018 to 2.62% with a 5% coupon in 2025. No retail orders were taken in 2026-2035 maturities. The 2015 and 2016 maturities were offered as sealed bids.
The PANY/NJ's $550 million of 189 Series consolidated tax-exempt bonds were priced for retail to yield from 0.51% with a 4% coupon in 2017 to 3.42% with a 3.25% coupon in 2033. A term bond in 2045 was priced as 5s to yield 3.22%. No retail orders were taken for the 2027, 2028, 2030-2032, 2034-2035 and then 2040 maturities. The 2016 maturity was offered as a sealed bid.
And the PANY/NJ's $100 million of 190 Series consolidated tax exempt bonds were priced for retail as 5s to yield 1.79% in 2026 and 1.90% in 2027. No retail orders were taken for the 2028-2045 maturities.
The issue is rated Aa3 by Moody's Investors Service and AA-minus by Standard & Poor's and Fitch Ratings.
Loop Capital Markets on Wednesday will hold the second of a two-day retail order period on the NYC TFA's $650 million of Fiscal 2015 Subseries E-1 future tax secured subordinate bonds. The institutional pricing is slated for Thursday.
The bonds were priced for retail to yield 0.87% with 1%, 3% and 5% coupons in a 2018 triple split maturity to 3.02% with a 5% coupon in 2033. A 2042 split maturity was priced as 3 5/8s to yield 3.70% and as 5s to yield 3.21%. No retail orders were taken in 2030, 2031, 2034, 2035 and 2041. A 2017 maturity was offered as a sealed bid.
The bonds are rated Aa1 by Moody's and triple-A by S&P and Fitch.
In the competitive arena on Wednesday, the state of Virginia will sell $214.88 million of Series 2015B general obligation refunding bonds. The deal is rated triple-A by Moody's, S&P and Fitch.
Virginia last sold bonds competitively on March 27, 2014, when JPMorgan won $133.81 million of Series 2014A GOs with a true interest cost of 3.0823%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $1.834 billion to $11.426 billion on Wednesday. The total is comprised of $3.399 billion competitive sales and $8.027 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 43,191 trades on Tuesday on volume of $11.186 billion.
Most active, based on the number of trades, was the Chicago Series 2012B taxable GO project and refunding 5.432s of 2042, which traded 325 times at an average price of 86.428 with an average yield of 6.508%. The bonds were initially priced at par to yield 5.432%.
