Prices of top-rated municipal bonds were weaker at mid-session, according to traders, with yields on longer dated maturities as much as two basis points higher.
Meanwhile in the primary, several new offerings came to market, the first of the week's new issue slate to hit the screens.
Secondary Market
Prices of top-quality munis were lower at midday. The yield on the 10-year benchmark muni general obligation rose as much as one basis point from 1.91% on Monday, while the yield on 30-year GO was up as much as two basis points from 2.79%, according to a read of MMD's triple-A scale.
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 rose to 1.92% from 1.90% as the 30-year yield remained flat at 2.57%.
On Monday, the 10-year muni to Treasury ratio was calculated at 98.8% versus 101.4% on Thursday, while the 30-year muni to Treasury ratio stood at 108.0% compared to 110.9%.
Primary Market
About $6.96 billion of new supply is set to come to market this week. An estimated $5.01 billion of negotiated deals are slated to be priced and about $1.95 billion of competitive offerings are scheduled for sale.
On Tuesday, Knoxville, Tenn., competitively sold $161.59 million of water and wastewater revenue refunding bonds in two separate issues.
Wells Fargo Securities won the $137.19 million of Series 2015A wastewater system revenue refunding bonds with a true interest cost of 3.4208%. No pricing information was immediately available.
The issue is rated Aa2 by Moody's Investors Service and AA-plus by Standard & Poor's. Knoxville last sold bonds on Aug. 20, 2014, when William Blair won $30 million Series 2014A wastewater revenue bonds with a TIC of 3.6041%.
Citi won Knoxville's $24.4 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 bonds on Aug. 20, 2014, when Citi won $8 million of Series AA-2014 water system revenue bonds with a TIC of 3.4899%.
Also in the competitive arena this week, North Carolina will sell $225 million of general obligation bonds 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.
Starting on Tuesday, the New York State Dormitory Authority is expected to come to market with three separate negotiated deals totaling more than $1 billion. The issues consist of $125 million of revenue bonds for The New School to be priced by Goldman, Sachs on Tuesday; and $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 New School bonds are rated A3 by Moody's and A-minus by S&P; the NYU bonds are rated Aa2 by Moody's and AA-minus by S&P.
On Wednesday, the North Texas Tollway Authority's $871 million toll road deal is expected to be priced by JPMorgan. The deal is rated A3 by Moody's and BBB-plus by S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $1.679 billion to $11.686 billion on Tuesday. The total is comprised of $4.650 billion competitive sales and $7.036 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 34,861 trades on Monday on volume of $7.202 billion.
Most active, based on the number of trades, was the University of Kansas Hospital Authority's 2015 KU Health System health facilities revenue refunding and improvement 4s of 2040, which traded 81 times at an average price of 101.092 with an average yield of 3.867%. The bonds were initially priced at 98.895 to yield 4.07%.
