Prices of top-shelf municipal bonds weakened at mid-session, traders said, with yields on some maturities strengthening by as much as two basis points.
In the primary market, New York City general obligation bonds were priced for retail investors as several large competitive offerings were sold.
Secondary Market
The yield on the 10-year benchmark muni general obligation was up by as much as two basis points from 2.18% on Monday, while the yield on the 30-year GO was as much as two basis points higher from 3.12%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were lower on Tuesday, with the yield on the two-year Treasury note rising to 0.66% from 0.65% on Monday, while the 10-year yield rose to 2.25% from 2.23% and the 30-year yield increased to 2.97% from 2.94%.
Market trading was cautious as the Federal Open Market Committee meets to discuss monetary policy on Tuesday and Wednesday. An announcement on interest rates is set for Wednesday afternoon, although most analysts think there will be no rate increase this time, but most likely at the next meeting in six weeks.
The 10-year muni to Treasury ratio was calculated on Monday at 95.8% versus 95.1% on Friday, while the 30-year muni to Treasury ratio stood at 105.0% compared to 105.3%, according to MMD.
Primary Market
Siebert Brandford Shank priced New York City's $750 million of Fiscal 2016 Series A&B GOs. Retail orders are being taken on Tuesday and Wednesday ahead of the institutional pricing on Thursday.
The $640.2 million of Series A bonds were priced to yield from 1% with 5% and 3% coupons in a split 2018 maturity to 2.70% with a 5% coupon in 2026; a 2017 maturity was offered as a sealed bid. No retails orders were taken in the 2027 through 2030 maturities.
The $109.8 million of Series B bonds were priced to yield from 1% with a 4% coupon in 2018 to 3.54% with a 3.5% coupon in 2035; the 2016 and 2017 maturities were offered as sealed bids.
The issue is rated Aa2 by Moody's Investors Service and AA by Standard & Poor's and Fitch Ratings.
In the competitive arena, the Virginia College Building Authority sold $290 million of Series 2015D educational facilities revenue bonds under the 21st Century College and Equipment Program.
Wells Fargo Securities won the issue with a true interest cost of 2.94%. The bonds were priced to yield from 0.17% with a 5% coupon in 2016 to 3.608% with a 3.50% coupon in 2035. The issue was rated Aa1 by Moody's and AA-plus by Fitch.
The last time the authority competitively sold comparable bonds was on May 1, 2014, when Bank of America Merrill Lynch won $27.99 million of Series 2014B educational facilities revenue refunding bonds with a TIC of 1.70%.
Fort Worth, Texas, sold $256 million of bonds in two separate sales.
Citigroup won the $127.82 million of Series 2015A general purpose refunding and improvement bonds with a TIC of 2.45%. The bonds were priced to yield from 0.20% with a 4% coupon in 2016 to 3.38% with a 3.375% coupon in 2035.
Barclays Capital won the $126.64 million of Series 2015A water and sewer system revenue refunding and improvement bonds with a TIC of 2.69%. No pricing information was immediately available.
The general purpose bonds are rated Aa1 by Moody's and AA-plus by S&P and Fitch and the water bonds are rated Aa1 by Moody's and AA by S&P and Fitch.
The last time the city competitively sold comparable securities was on Aug. 14, 2012, when Robert W. Baird won $85.79 million of Series 2012 combination tax and revenue certificates of obligation with a TIC of 2.65% and on Sept. 14, 2010, when the city sold $45.87 million of Series 2010C water and sewer system revenue bonds to Wells Fargo with a TIC of 3.35%.
In the negotiated sector, Citigroup priced San Antonio, Texas' $270.52 million of tax-exempt Series 2015 general improvement and refunding bonds and Series 2015 combination tax and revenue certificates of obligation.
The $234.23 million of bonds were priced to yield from 0.17% with a 5% coupon in 2016 to 3.53% with a 4% coupon in 2035. The $36.285 million of certificates were priced to yield from 0.19% with a 1.5% coupon in 2016 to 3.368% with a 3.5% coupon in 2035.
On Monday, Citi priced the $43.94 million of San Antonio's Series 2015 taxable combination tax and revenue certificates of obligation. The issue was priced as 1s to yield 0.23% in 2016 and priced at par to yield from 0.88% in 2017 to 4.162% in 2035.
Both issues were rated triple-A by Moody's, S&P and Fitch.
Since 1995, the city of San Antonio has issued roughly $18.35 billion of debt. The years of 2010 and 2012 saw the most issuance with $1.55 billion and $2.06 billion, respectively. The Alamo city issued just $125 million and $86 million in 1995 and 1999, respectively.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 32,910 trades on Monday on volume of $5.349 billion. The most active bond, based on the number of trades, was the Harris County, Texas, Cultural Education Facilities Finance Corp.'s Series 2015 Houston Methodist Hospital revenue bond 4s of 2045, which traded 105 times at an average price of 99.105, an average yield of 4.026%. The bonds were initially priced at 96.417 to yield 4.21%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $165.1 million to $11.91 billion on Tuesday. The total is comprised of $4.44 billion competitive sales and $7.48 billion of negotiated deals.
