The municipal bond market is awaiting the first leg of the week's new issue supply to come to market on Wednesday. Several big negotiated and competitive deals are on tap led by issuers in Illinois and Florida.
Traders will be watching the situation in both Greece and China and monitoring the effects on U.S. Treasury yields.
Secondary Market
Treasury prices were mixed, but little changed, on Wednesday, with the yield on the two-year Treasury note remaining flat at 0.57% from Tuesday, while the 10-year yield rose to 2.24% from 2.22% and the 30-year yield increased to 3.01% from 3.00%.
On Tuesday, the yield on the 10-year benchmark muni general obligation closed down four basis points to 2.22% from 2.26% on Monday, while the yield on the 30-year GO was off six basis points to 3.21% from 3.27%, according to the final read of Municipal Market Data's triple-A scale.
"Muni traders should note some technically significant levels that are nearby the 2.22% close on the triple-A MMD 10-year index," MMD Senior Market Analyst Randy Smolik wrote in a Wednesday market comment. "One should note the range in yields from April 6 from 1.91% to 2.38%. A 38% retrace is at 2.20%. Re-enforcing that level was a note major yield low of 2.19% that occurred on May 29. The next retracement level of note would be at 2.14%."
The 10-year muni to Treasury ratio was calculated on Tuesday at 100.5% versus 99.0% on Monday, while the 30-year muni to Treasury ratio stood at 106.6% compared to 104.4%, according to MMD.
Primary Market
In the negotiated sector on Wednesday, the Illinois State Toll Highway Authority's $400 million of Series 2015A toll highway senior revenue bonds are expected to be priced by Bank of America Merrill Lynch. The bonds are rated Aa3 by Moody's and AA-minus by S&P and Fitch.
This deal is the first of two new-money borrowings to finance a record year of capital spending. The $1.6 billion of capital spending planned this year is part of the 15-year, $12 billion Move Illinois capital program launched in 2011. The authority operates 286 miles of toll highways in 12 counties in northern Illinois.
Since 1996, the authority has issued almost $8 billion of bonds, with the most issuance occurring in 2008 and 2014 when it sold $1.1 billion and $1.5 billion, respectively. The authority sold no debt in 1997, 1999 through 2004 or in 2011 or 20012.
JPMorgan is slated to price Austin, Texas' $289 million of Series 2015A and taxable Series 2015B wastewater system revenue refunding bonds on Wednesday. The issue is initially structured as serials maturing from 2016 through 2035. The bonds are rated Aa2 by Moody's, AA by S&P and AA-minus by Fitch.
RBC Capital Markets is slated to price on Wednesday the Desert Sands Unified School District, Calif.'s $157 million of Series 2015 Election of 2014 general obligation bonds and Series 2015 GO refunding bonds.
Citigroup is set to price the Massachusetts Port Authority's $179 million of Series 2015A non-AMT and Series 2015B AMT revenue bonds on Wednesday. The bonds are rated AA by S&P.
Citi is also expected to price the New York State Mortgage Agency's $152 million of homeowner mortgage revenue bonds consisting of Series 192 non-AMT, Series 193 non-AMT and Series 194 AMT bonds on Wednesday.
In the competitive sector, the Central Florida Expressway Authority is set to sell $194 million of Series 2015 senior lien revenue bond anticipation notes on Wednesday. The BANs are rated A2 by Moody's and A by S&P and Fitch.
Hillsborough County, Fla., is set to sell $140 million of Series 2015 community investment tax refunding revenue bonds on Wednesday. The bonds are rated AA2 by Moody's.
In the competitive arena, the city and county of San Francisco is set to sell two separate issues of certificates of participation totaling about $135 million on Wednesday. The sales consist of $111 million of Series 2015A COPs for the War Memorial Veterans Building seismic upgrade and improvements and $24 million of Series 2015B taxable COPs for the War Memorial Veterans Building seismic upgrade and improvements. The issues are rated Aa3 by Moody's, AA by S&P and AA-minus by Fitch.
The Metropolitan Council of Minnesota is slated to sell three separate issues of general obligation bonds totaling $151 million on Wednesday. The sales consist of $100 million Series 2015C GO wastewater revenue bonds, $45 million of Series 2015A GO transit bonds and $6 million of Series 2015B GO park bonds.
The Clark County Water District, Nev., will sell $100 million of Series 2015 limited tax GO water reclamation refunding bonds, which are additionally secured by pledged revenues. The issue is rated Aa1 by Moody's and triple-A by S&P.
On Thursday, the North Carolina Municipal Power Agency Number 1's $463 million of refunding bonds scheduled to be priced by Morgan Stanley.
The issue is initially structured as Series 2015 A, B and C refunding bonds, Series 2015 D taxable refunding bonds and Series 2015 E forward delivery bonds. The bonds are rated A by S&P and Fitch.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 43,222 trades on Tuesday on volume of $8.069 billion.
The most active bond, based on the number of trades, was the Corpus Christi, Texas, Series 2015C utility system junior lien revenue improvement 4 1/8s of 2045, which traded 219 times at an average price of 100.198 with an average yield of 4.086%. The bonds were initially priced at 97.725 to yield 4.26%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $169.4 million to $12.10 billion on Wednesday. The total is comprised of $3.78 billion competitive sales and $8.32 billion of negotiated deals.
