Prices of top-rated municipal bonds finished stronger on Tuesday, traders said, with yields on some maturities receding by as much as three basis points.
In the primary, traders saw two new deals from issuers in California and Washington state hit the screens.
Secondary Trading
The yield on the 10-year benchmark muni general obligation on Tuesday ended three basis points lower at 2.03% from 2.06% on Monday, while the yield on the 30-year GO slipped three basis points to 3.04% from 3.07%, according to the final read of Municipal Market Data's triple-A scale.
Treasury prices were mixed, with the yield on the two-year Treasury note falling to 0.64% from 0.67% on Monday, while the 10-year yield fell to 2.05% from 2.05% and the 30-year yield was unchanged from 2.86%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 98.2% versus 98.4% on Monday, while the 30-year muni to Treasury ratio stood at 106.2% compared to 107.0%, according to MMD.
Primary Market
RBC Capital Markets priced the California State of Public Works Board's $555.54 million of Series 2015F and 2015G lease revenue refunding bonds.
The $433.3 million of Series 2015F Department of General Services' various state office buildings bonds were priced to yield from 0.25% with a 3% coupon in 2016 to 3.05% with a 5% coupon in 2030. The $122.24 million of Series 2015G Department of Public Health's Richmond Laboratory bonds were priced to yield from 0.58% with a 2% coupon in 2017 to 3.47% with a 3.375% coupon in 2031.
The bonds are rated A1 by Moody's Investors Service, A-plus by Standard & Poor's and A by Fitch Ratings.
Bank of America Merrill Lynch priced and repriced Energy Northwest, Wash.'s $107.63 million of Series 2015C Project 1 electric revenue refunding bonds, electric revenue refunding bonds for the Columbia Generation Station and Project 3 electric revenue refunding bonds.
The $42.11 million of Project 1 bonds were priced as 3s and 5s to yield 2.26% in a split 2025 maturity. The $38.72 million of Columbia Generating bonds were priced as 5s to yield 2.81% in 2030 and 2.87% in 2031. The $26.81 million of Project 3 bonds were priced as 5s to yield 2.41% in 2026.
The issue is rated Aa1 by Moody's, AA-minus by S&P and AA by Fitch.
Washington state this week is offering about $983 million of bonds, which are made up of four competitive sales and one negotiated deal.
On Tuesday, BAML repriced and restructured the state's $53 million of Series 2016A-2 various purpose general obligation green bonds.
The issue was upsized from the $39 million tentatively priced on Monday and was priced to yield from 0.27% with a 2% coupon in 2016 to 2.30% with a 5% coupon in 2025. A 2030 maturity was priced as 3s to yield 3.20%; a 2035 maturity was priced as 3 3/8s to yield 3.55%; and a 2040 maturity was priced as 3 3/4s to yield 3.76%.
On Wednesday, the Evergreen State will be selling four competitive issues consisting of $61 million of Series 2016T GO taxable bonds, $192 million of Series 2016B motor fuel tax GOs, $194 million of Series R-2016A various purpose GO refunding bonds, and $498 million of Series 2015A-1 various purpose GOs.
All of the issues are rated Aa1 by Moody's and AA-plus by S&P and Fitch.
Including this week's issues, the state has sold about $41 billion of debt since 1995, with the biggest offerings coming in 2010 and 2012 when it sold $3.40 billion and $3.50 billion, respectively. The lowest years of issuance were in 1996 and 1998 when the state offered $550 million and $546 million, respectively.
Also on Wednesday, RBC is set to price the state of Connecticut's $840 million of Series 2015A and Series 2015B special tax obligation bonds for transportation infrastructure for retail investors. The Series 2015B will be refunding bonds. This deal is scheduled to be priced for institutions on Thursday.
Barclays Capital is expected to price Miami-Dade County Educational Facilities Authority, Fla.'s $650 million of revenue and revenue refunding bonds for the University of Miami on Wednesday. Tentatively, the deal is split into $400 million of tax-exempt and $250 million of taxable, Series 2015A and B.
JPMorgan Securities is slated to price for retail the Board of Regents of the University of North Texas System's $222 million of Series 2015A revenue financing system refunding and improvement bonds and Series 2015B taxable revenue financing system refunding bonds. The institutional pricing is slated for Wednesday.
The bonds are rated Aa2 by Moody's and AA by Fitch.
Ramirez is slated to price the Massachusetts Bay Transit Authority's $279.77 million of Series 2015 A and B senior sales tax bonds on Wednesday.
GIC Muni Conference in New York
The Global Interdependence Center held its "Munis: Chicago, Detroit, Puerto Rico and More" conference on Tuesday at the New York Athletic Club, with panel discussions on whether are munis rich or cheap, a city credit review and a Puerto Rico update.
The first panel agreed that the answer to the question of are munis rich or cheap, depends on who you ask.
"It depends on a variety of factors," said Kathleen McNamara, senior municipal bond strategist, wealth management research at UBS and one of the four panelists for the first discussion. "As far as the outlook goes, for technicals: the past months have been technically supportive of munis, but we do think that will reverse in the fourth quarter and that might present a buying opportunity."
The city credit review discussion was mostly about the names that have been dominating headlines all year - Chicago and Detroit.
Tom Tzitzouris, director, fixed income strategist, Strategas Research Partners and one of three panelists in the discussion said that city fiscal health is general improving and should continue to do so until the next recession, which will likely be after 2017. "There is a difference between the ability to pay and the willingness to pay," he said. "Munis will remain relatively cheap due to headline risk from Puerto Rico and Chicago [creating] investing opportunities."
