Municipal bond market participants are eagerly anticipating the Chicago Board of Education's $875 million deal, which JPMorgan Securities is set to price on Wednesday.
Secondary Market
Treasuries were weaker on Wednesday morning. The yield on the two-year Treasury rose to 0.86% from 0.84% on Tuesday, while the 10-year Treasury yield gained to 2.02% from 1.99% and the 30-year Treasury bond yield increased to 2.81% from 2.78%.
The yield on the 10-year benchmark muni general obligation was steady from 1.75% on Monday, while the 30-year muni yield was unchanged at 2.75%, according to a final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated on Tuesday at 87.8% compared to 86.5% on Monday, while the 30-year muni to Treasury ratio stood at 98.9% versus 98.1%, according to MMD.
Primary Market
JPMorgan is set to price the CPS' $875 million of unlimited tax general obligation bonds with dedicated revenues, consisting of $795.52 million of Series 2016A tax-exempt GOs in three term maturities of 2035, 2040 and 2044. The $79.49 million of Series 2016B taxables are tentatively structured as a 2033 bullet.
A preliminary scale marketing the bonds was released on Tuesday. Per the scale, the 20-year maturity is at a 7.70% yield, which is 524 basis points over Municipal Market Data's triple-A benchmark and 429 basis points more than what a triple-B borrower pays. The deal carries junk ratings of B-plus from Standard & Poor's and Fitch Ratings but a triple-B from Kroll Bond Rating Agency.
The 25-year and final 28-year maturities were offering a preliminary yield of 7.75%, 506 basis points over MMD's AAA scale, and 502 basis points, respectively. Both were greater than 400 basis points over a BBB credit.
The preliminary price on the taxable, 17-year maturity offered a yield of 9.75% with a coupon of 9.50%.
On Wednesday, Siebert Brandford Shank & Co. priced Kansas City, Mo.'s $187.68 million of Series 2016A sanitary sewer system improvement and refunding revenue bonds.
The issue was priced to yield from 0.73% with a 2% coupon in 2018 to 3.16% with a 4% coupon in 2036; a 2040 split maturity was priced as 3 3/8s to yield 3.48% and as 4s to yield 3.36%; a 2017 maturity was offered as a sealed bid.
The bonds were rated Aa2 by Moody's Investors Service and AA by S&P.
Citi is expected to price Katy Independent School District, Texas' $228.11 million of unlimited tax school building bonds. The deal is backed by the Permanent School Fund guarantee program and is rated triple-A by both Moody's and S&P.
Morgan Stanley is scheduled to price the successor agency to the redevelopment agency of the city of Pittsburg, Calif.'s $204.59 million for the Los Medanos Community Development Project.
In the competitive arena, the Massachusetts Clean Water Trust will competitively sell $211.44 million of Series 19 state revolving fund green bonds. The issue is rated triple-A by Moody's, S&P and Fitch.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 39,752 trades on Tuesday on volume of $6.18 billion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar fell $1.50 billion to $6.79 billion on Wednesday. The total is comprised of $2.25 billion of competitive sales and $4.54 billion of negotiated deals.
Yvette Shields contributed to this report
