Prices of top-rated municipal bonds finished weaker on Wednesday, traders said, with yields on some maturities increasing one basis point.
In the primary, a slew of new issues came to market a day ahead of the Federal Reserve’s decision on interest rates.
Secondary Trading
The yield on the 10-year benchmark muni general obligation ended one basis point stronger at 2.26% from 2.25% on Tuesday, while the yield on the 30-year GO was one basis point stronger at 3.25% from 3.24%, according to the final read of Municipal Market Data's triple-A scale.
Treasury prices were little changed on Wednesday, with the yield on the two-year Treasury note rising to 0.80% from 0.79% on Tuesday, while the 10-year yield rose to 2.29% from 2.27% and the 30-year yield increased to 3.08% from 3.06%.
The 10-year muni to Treasury ratio was calculated on Wednesday at 98.1% versus 102.3% on Tuesday, while the 30-year muni to Treasury ratio stood at 105.1% compared to 106.0%, according to MMD.
Primary Market
Municipal bond traders had a busy day as the bulk of the week’s offerings were priced. The Federal Open Market Committee began its two-day meeting and will release its decision statement Thursday afternoon followed by Fed Chair Janet Yellen’s press conference. There are no major sales slated for pricing on Thursday or Friday.
JPMorgan Securities priced the biggest deal of the week -- the Texas Transportation Commission’s $889.6 million of Series 2015A general obligation mobility fund refunding bonds.
The advance refunding was priced to yield from 1.01% with a 5% coupon in 2018 to 3.63% and 3.28% with 4% and 5% coupons in a split 2036 maturity.
The issue was rated triple-A by Moody’s Investors Service, Standard & Poor’s and Fitch Ratings.
Citigroup priced the Illinois’ Metropolitan Pier and Exposition Authority’s $219.65 million of bonds for the McCormick Place expansion project. The issue was comprised of $153.15 million of Series 2015A current interest bonds and capital appreciation bonds and $66.5 million of Series 2015B CIBs.
The 2015A CIBs were priced in a 2053 split maturity as 5s to yield 5.06% and as 5 1/2s to yield 4.84%. The Series 2015A CABs were priced in a 2052 split maturity as zeros to yield 5.50% and 6%. The 5.50% CABs were insured by Assured Guaranty Municipal Corp.
The Series 2015B CIBs were priced as 5s to yield 4.47% in 2035, 4.65% in 2040, 4.87% in 2045 and 5.06% in 2052.
The bonds were rated BBB-plus by both S&P and Fitch except for the 2052 CABs insured by AGM, which carry an enhanced AA rating from S&P.
Citigroup also priced the Los Angeles Department of Water and Power’s $268.59 million of Series 2015B power system revenue bonds. The issue was priced as 3s, 4s and 5s to yield 1.03% in a triple-split 2018 maturity. The bonds were rated Aa3 by Moody’s and AA-minus by S&P and Fitch.
And Citi priced the city of Philadelphia’s $191.59 million of GOs. The bonds were priced as 2s to yield 0.42% in 2016 and as 5s to yield from 0.94% in 2017 to 3.78% in 2033; a 2035 maturity was priced as 4s to yield 4.15%. The issue is rated A2 by Moody’s, A-plus by S&P and A-minus by Fitch.
Since 1995, Philadelphia has issued roughly $11.96 billion in bonds. The years of 2007 and 2010 saw the highest issuance, when it issued $1.35 billion and $1.36 billion, respectively. The City of Brotherly Love did not come to market at all in 1996 and 2000.
Bank of America Merrill Lynch priced the Delaware County Authority, Pa.’s $140.51 million of Series 2015 revenue bonds for Villanova University. The issue was priced to yield from 1.85% with a 4% coupon in 2020 to 3.71% with a 5% coupon in 2035; a 2040 split maturity was priced as 4s to yield 4.07% and as 5s to yield 3.86%; a 2045 split maturity was prices as 4s to yield 4.17% and as 5s to yield 3.92%. The bonds were rated A1 by Moody’s and A-plus by S&P.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 37,483 trades on Tuesday on volume of $7.362 billion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $267.9 million to $8.95 billion on Wednesday. The total is comprised of $2.78 billion competitive sales and $6.17 billion of negotiated deals.
