Prices of top-quality municipal bonds closed out the day weaker, traders said, with yields on some maturities increasing by as much as three basis points.
In the primary on Wednesday, traders saw several new deals sell, led by the University of Washington, Austin, Texas, and the New York Metropolitan Transportation Authority.
Secondary Trading
The yield on the 10-year benchmark muni general obligation finished two basis points higher at 2.22% from 2.20% on Tuesday, while the yield on the 30-year GO rose to 3.17% from 3.14%, according to the final read of Municipal Market Data's triple-A scale.
Treasury prices were mixed on Wednesday, with the yield on the two-year Treasury note flat from 0.74% on Tuesday, while the 10-year yield was unchanged from 2.19% and the 30-year yield decreased to 2.95% from 2.97%.
The 10-year muni to Treasury ratio was calculated on Wednesday at 101.9% versus 100.5% on Tuesday, while the 30-year muni to Treasury ratio stood at 107.8% compared to 105.7%, according to MMD.
Puerto Rico Bond Trading Mixed
On Wednesday, the Puerto Rico "Working Group for the Fiscal and Economic Recovery of Puerto Rico"
The plan seeks to achieve long-term fiscal stability and economic growth.
In secondary trading, prices of Puerto Rico general obligation bonds moved lower, according to the Municipal Securities Rulemaking Board's EMMA website.
The commonwealth Series 2014A GO 8s of 2035 traded on Wednesday at a low price of 71.50 cents on the dollar, a high yield of 11.731%, in 14 trades totaling $17.3 million. On Tuesday, the 8s were trading at a low price of 74.30 cents on the dollar, a high yield of 11.265%, in 10 trades totaling $13.4 million.
Other Puerto Rico bonds were trading mixed.
Also among the more actively traded names, were the commonwealth Highway and Transportation Authority's 2007 Series N revenue refunding 5 1/4s of 2032. The bonds traded on Wednesday at a low price of 90.88 cents on the dollar, a high yield of 6.126%, in 13 trades totaling $255,000. On Tuesday, the 5 1/4s were trading at a low price of 90.25, a high yield of 6.191%, according to EMMA.
The Puerto Rico Sales Tax Financing Corp.'s Series 2010A first subordinate series sales tax revenue 5 1/2s traded on Wednesday at a low price of 41.739 cents on the dollar, a high yield of 14.207%, in 14 trades totaling $775,000. On Tuesday, the 5 1/2s were trading at a low price of 42.995, a high yield of 13.825%, according to EMMA.
Primary Market
In the competitive arena, the University of Washington sold two separate issues totaling almost $196 million.
Bank of America Merrill Lynch won the $159.16 million of Series 2015C general revenue and refunding bonds with a true interest cost of 3.54%. The bonds were priced to yield from 0.37% with a 5% coupon in 2016 to 3.58% with a 4% coupon in 2037. Term bonds in 2040 and 2045 were priced as 4s to yield 3.77% and 3.84%, respectively.
Fifth Third Securities won the $36.79 million of Series 2015D taxable general revenue and refunding bonds with a TIC of 2.56%. Pricing information wasn't available.
Both issues were rated triple-A by Moody's Investors Service and AA-plus by Standard & Poor's.
Since 1995, the university has issued roughly $2.15 billion of bonds. The years of 2011 and 2012 saw the most issuance with $211 million and $567 million, respectively. The Huskies didn't come to market at all in 1997 through 1999, 2001, 2003, 2006 or 2014.
In the competitive short-term market, the New York MTA sold $500 million of Series 2015A dedicated tax fund bond anticipation notes. The BANs were won by eight underwriting groups.
Morgan Stanley won $100 million with a bid of 0.75%, a premium of $391,000, an effective rate of 0.195020%. Morgan Stanley won another $100 million with a bid of 0.75%, a premium of $394,000, an effective rate of 0.190790%.
JPMorgan Securities won $75 million with a bid of 0.75%, a premium of $293,250, an effective rate of 0.195020%.
Bank of America Merrill Lynch won $70 million with a bid of 0.75%, a premium of $272,300, an effective rate of 0.197850%.
Wells Fargo Securities won $50 million with a bid of 0.75%, a premium of $195,500, an effective rate of 0.195020%.
RBC Capital Markets won $35 million with a bid of 0.75%, a premium of $135,250, an effective rate of 0.197450%.
Citigroup won $30 million with a bid of 0.75%, a premium of $117,005, an effective rate of 0.196410%.
Goldman, Sachs won $30 million with a bid of 0.75%, a premium of $117,600, an effective rate of 0.193610%.
FTN Financial Capital won $10 million with a bid of 0.75%, a premium of $39,100, an effective rate of 0.195020%.
The issue was rated SP1-plus by S&P and F1-plus by Fitch.
In the negotiated sector, Jefferies priced Austin, Texas' $294.04 million of public improvement bonds, public property finance contractual obligations, and certificates of obligation.
The $236.13 million Series 2015 public improvement and refunding bonds were priced to yield from 0.39% with a 2% coupon in 2016 to 3.58% with a 4% coupon in 2035.
The $43.47 million of certificates of obligation were priced to yield from 0.39% with a 2% coupon in 2016 to 3.16% with a 5% coupon in 2035.
The $14.45 million of public property finance contractual obligation bonds were priced to yield from 0.35% and 0.45% with 2% coupons in a split 2016 maturity to 1.97% and 2.04% with 5% coupons in a split 2022 maturity.
The issue was rated triple-A by Moody's, S&P and Fitch Ratings.
BAML Priced the San Diego County Water Authority's $182.33 million of Series 2015A water revenue refunding bonds. The issue was priced to yield from 1.12% with a 5% coupon in 2019 to 2.87% with a 5% coupon in 2029. The bonds were rated Aa2 by Moody's and AA-plus by S&P and Fitch.
JPMorgan priced Oregon's Tri-County Metropolitan District's $133.6 million of senior lien payroll tax revenue bonds. The $68.97 million of Series 2015A bonds were priced to yield from 0.20% with a 3% coupon in 2016 to 3.10% with a 5% coupon in 2034; a 2040 split term bond was priced as 4s to yield 4.77% and as 5s to yield 3.29%. The $64.63 million of Series 2015B bonds were priced to yield from 0.20% with a 3% coupon in 2016 to 3.46% with a 3.135% coupon and 2.96% with a 5% coupon in a split 2031 maturity. The issue was rated triple-A by Moody's and S&P.
On Thursday, Barclays Capital is expected to price the biggest deal of the week -- North Texas Tollway Authority System's $750 million of Series 2015B first-tier revenue refunding bonds. The bonds were rated A1 by Moody's and A by S&P.
Also on Thursday, RBC Capital Markets is slated to price the University of Oklahoma's $245 million of general revenue bonds consisting of Series 2015C tax-exempts and Series 2015D taxables. The issue is rated A-plus by S&P and AA-minus by Fitch.
In the negotiated short-term market on Thursday, JPMorgan Securities is set to price the Detroit School District's $121 million of Series 2015E junior subordinate lien obligations. The state aid revenue notes are being issued through the Michigan Finance Authority. They are rated SP3 by S&P.
