Prices of top-rated municipal bonds finished weaker on Tuesday, according to traders, with yields on some maturities moving up by one basis point.
In the primary, the first of the week's new issue slate to hit the screens.
Secondary Market
The yield on the 10-year benchmark muni general obligation rose by one basis point to 1.92% from 1.91% on Monday, while the yield on 30-year GO increase one basis point to 2.80% from 2.79%, according to the final read of MMD's triple-A scale.
"Municipal bond yields edged up modestly amid a backdrop of light secondary trading as the largest deals of the week get set to price," Interactive Data said in its daily report.
Treasury prices were mixed on Tuesday. The yield on the two-year Treasury note increased to 0.52% from 0.50% on Monday, while the 10-year yield slipped to 1.89% from 1.90% as the 30-year yield fell to 2.53% from 2.57%.
The 10-year muni to Treasury ratio was calculated at 101.5% versus 100.4% on Monday, while the 30-year muni to Treasury ratio stood at 110.8% compared to 108.7%.
Primary Market
Knoxville, Tenn., competitively sold $152.84 million of water and wastewater revenue refunding bonds in two separate issues.
Wells Fargo Securities won the $129.83 million of Series 2015A wastewater system revenue refunding bonds with a true interest cost of 3.4208%. The issue was priced to yield from 0.20% with a 5% coupon in 2016 to 3.46% with a 4% coupon in 2042. The issue is rated Aa2 by Moody's Investors Service and AA-plus by Standard & Poor's.
Knoxville last sold wastewater bonds on Aug. 20, when William Blair won $30 million Series 2014A wastewater revenue bonds with a TIC of 3.6041%.
Citi won Knoxville's $23.01 million of Series BB-2015 water system revenue refunding bonds with a TIC of 2.8499%. The bonds were priced to yield from 0.25% with a 5% coupon in 2016 to 3.21% with a 3.125% coupon in 2033. The issue is rated Aa2 by Moody's and triple-A by S&P.
Knoxville last sold water bonds on Aug. 20, when Citi won $8 million of Series AA-2014 water system revenue bonds with a TIC of 3.4899%.
JPMorgan priced the California Housing Finance Agency's $174.18 million of taxable Series 2015A multifamily housing revenue bonds. The issue was priced at par to yield 2.379% in 202, 2.966% in 2022, 3.65% in 2025 and 4.05% in 2030. The bonds are rated A1 by Moody's and AA-plus by S&P.
The New York State Dormitory Authority came to market on Tuesday with the first of three separate negotiated deals totaling more than $1 billion.
Goldman, Sachs priced DASNY's $124.26 million of Series 2015A revenue bonds for The New School. The issue was priced to yield from 0.41% with a 3% coupon in 2016 to 3.26% with a 5% coupon in 2035. A 2040 term bond was priced as 5s to yield 3.37%; a 2045 term was priced as 5s to yield 3.42% and a split 2050 maturity was prices as 4s to yield 4.10% and as 5s to yield 3.625%. The New School bonds are rated A3 by Moody's and A-minus by S&P.
Also slated for this week are DANSY's $690.49 million of Series 2015A revenue bonds and $265.97 million of Series 2015B taxable revenue bonds for New York University to be priced by Morgan Stanley on Thursday. The NYU bonds are rated Aa2 by Moody's and AA-minus by S&P.
"There is a reasonable amount of supply and deals are getting done, but there are some balances building in the Street as customers are focused on new issues," said a trader. "Deals aren't going the way some people thought or would like them to, but if there is a deal that is attractive, then people are going to take a swing at it."
Looking ahead, North Carolina will sell $225 million of general obligation bonds in the competitive arena on Wednesday. The GOs are rated triple-A by Moody's, S&P and Fitch Ratings.
North Carolina last sold bonds on April 16, 2014, when Morgan Stanley won $206.69 million of Series 2014A GO refunding bonds with a TIC of 1.8035%.
Since 1995, the Tar Heel state has sold approximately $15.5 billion of GOs. The largest issuance occurred in 2003 and 2004 when $1.69 billion and $2.6 billion were sold, respectively. Only $85 million of bonds were issued in 1995 and no bonds were sold in 1996.
Also on Wednesday, the North Texas Tollway Authority's $871 million toll road deal is expected to be priced by JPMorgan.
The authority is looking to cut its annual debt service by $80 million through the issuance of these second-tier toll revenue bonds. The deal is rated A3 by Moody's and BBB-plus by S&P.
