Municipal bond traders on Tuesday are set to see more supply hit the market, led by the Texas Water Development Board and Pennsylvania Turnpike Commission deals.
Secondary Market
Treasuries were narrowly mixed on Tuesday morning. The yield on the two-year Treasury rose to 0.78% from 0.77% on Monday, the 10-year Treasury yield fell to 1.68% from 1.70% and the yield on the 30-year Treasury bond decreased to 2.42% from 2.44%.
The Federal Open Market Committee will begin its monetary policy meeting on Tuesday and will announce its decision on interest rates on Wednesday. Most policy experts believe the Fed will not raise rates at this meeting.
Top-rated municipal bonds finished mixed on Monday. The yield on the 10-year benchmark muni general obligation finished steady from 1.57% on Friday, while the yield on the 30-year rose two basis point to 2.33% from 2.31%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated at 92.7% on Monday compared to 92.5% on Friday, while the 30-year muni to Treasury ratio stood at 95.3% versus 94.4%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 32,056 trades on Monday on volume of $8.37 billion.
Primary Market
Bank of America Merrill Lynch is set to price the Texas Water Development Board's $591.74 million of Series 2016 Master Trust State Water Implementation Revenue Fund for Texas revenue bonds for institutions on Tuesday after holding a one-day retail order period on Monday.
The issue was priced for retail to yield from 0.80% with a 4% coupon in 2018 to 2.98% with a 3% coupon in a split half of a 2036 maturity; a split half of a 2046 maturity was priced as 4s to yield 2.76% and a split half of a 2051 maturity was priced as 3 1/2s to yield 3.11%. A 2017 maturity was offered as a sealed bid.
No retail orders were taken in the 2028-2029 and 2031-2032 maturities, a split half of a 2034 maturity, 2035, a split half of a 2036 maturity, a split half of a 2041 maturity, a split half of a 2046 maturity, the 2047 maturity or a split half of a 2051 maturity.
Since 2006, the board has issued almost $4.5 billion of bonds, with the most issuance occurring in 2015 when it sold about $1.3 billion of debt. The board did not come to market in 2011 or 2014.
The SWIRFT bonds are rated triple-A by S&P Global Ratings and Fitch Ratings.
On Tuesday, Goldman Sachs is set to price the Pennsylvania Turnpike Commission's $649.89 million of subordinate revenue refunding bonds.
The deal is expected to consist of $391.52 million of Subseries A bonds, $82.17 million of Subseries B taxables and $176.2 million of motor license fund enhanced bonds.
The two subseries are rated A3 by Moody's Investors Service and A-minus by Fitch, while the enhanced motor license series is rated A2 by Moody's and A-minus by Fitch.
Barclays Capital is expected to price the Georgia Private Colleges and Universities Authority's $328.78 million of Series 2016 A&B revenue bonds for Emory University on Tuesday. The deal is rated Aa2 by Moody's, AA by S&P and AA-plus by Fitch.
RBC Capital Markets is expected to price the Pennsylvania Economic Development Finance Authority's $233 million of Series 2016 UPMC revenue bonds on Tuesday. The deal is rated Aa3 by Moody's, A-plus by S&P and AA-minus by Fitch.
Goldman is set to price the New Jersey Healthcare Facility Authority's $228.35 million of refunding bonds for the Atlantic Health Corp. The deal is rated A1 by Moody's and AA-minus by S&P.
In the competitive arena, the New York City Municipal Water Finance Authority is scheduled to competitively sell $200 million of Fiscal 2017 Series AA water and sewer system second general resolution revenue bonds on Tuesday.
The deal is rated AA-plus by S&P and Fitch.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $220.6 million to $13.41 billion on Tuesday. The total is comprised of $4.26 billion of competitive sales and $9.16 billion of negotiated deals.
