Prices of top-rated municipal bonds were stronger at mid-session, traders said, with yields on some maturities down by as much as three basis points.
Meanwhile, more supply hit the market as the state of Nevada sold three separate issues totaling about $291 million in the competitive sector.
Elsewhere, Federal Reserve Chair Janet Yellen continues answering questions during the second day of her semi-annual monetary policy report to Congress before the House Financial Services Committee.
Yellen reiterated the Fed's patient stance on interest rates, which the market interprets as meaning there will be no rate hikes at the next two FOMC meetings. The FOMC meets on March 17-18 and then on April 28-29. The June 16-17 FOMC meeting will now be the one most closely watched and there will be a summary of economic projections released with the policy statement as well as a press conference held by Yellen afterward.
Primary Market
All three issues from Nevada carry ratings of Aa2 by Moody's Investors Service, AA by Standard & Poor's and AA-plus by Fitch Ratings.
Morgan Stanley won Nevada's $196.24 million Series B limited tax general obligation capital improvement and cultural affairs refunding bonds with a true interest cost of 2.3684%. No other information was immediately available.
Bank of America Merrill Lynch won the $74.4 million Series A limited tax GO university system revenue supported projects bonds with a TIC of 2.7017%. No other information was immediately available.
Morgan Stanley won the $20.805 million Series C limited tax GO natural resources refunding bonds with a TIC of 2.6798%. No other information was immediately available.
The Silver State was last in the market on June 3, 2014, when it competitively sold $29.85 million of limited tax taxable GO subordinate revenue supported refunding bonds.
Wells Fargo Securities will price the New York City Transitional Finance Authority's $700.5 million of tax-exempt fixed-rate refunding bonds for institutions on Wednesday. The bonds are rated Aa1 by Moody's and triple-A by S&P and Fitch. The deal was priced for retail on Tuesday.
The $655.8 million future tax secured tax-exempt subordinate bonds, Fiscal 2015 Series C, were priced for retail to yield from 0.70% with a 4% coupon in 2017 to 3.25% with a 3.25% coupon in 2031; a 2016 maturity was offered as a sealed bid. The $44.7 million future tax secured tax-exempt subordinate bonds, Fiscal 2015 Series D, were priced for retail to yield from 0.70% in 2017 with a 4% coupon to 2.71% with a 4% coupon in 2027; the 2015 and 2016 maturities were offered as sealed bids.
On Tuesday, Loop Capital Markets priced the largest deal of the week -- Atlanta, Ga.'s $1.245 billion of water and wastewater revenue refunding bonds.
"The city recently completed an investor roadshow for the transaction and we were pleased with the level of interest in this offering," said James Beard, Atlanta's finance director.
The bonds were priced to yield from 0.48% with a 2% coupon in 2016 to 3.32% with a 5% coupon in 2035; a 2040 term bond was priced as 5s to yield 3.38% and a 2043 term was priced as 5s to yield 3.41%.
Standard & Poor's assigned an AA-minus rating to the refunding, with a stable outlook. S&P cited the city's strong financial performance, high liquidity, and a large pay-as-you-go capital program. Fitch assigned an A-plus rating to the issue and revised the outlook to positive from stable, citing improving financial metrics, cost controls, and relatively stable sales at the Department of Watershed Management, which oversees the wastewater program. Moody's assigned an Aa3 rating with a stable outlook to the deal.
Proceeds will be used to refund about $231 million of 2001A bonds, $479 million of 2004 bonds, and $596 million of 2009A bonds. Beard said savings from the transaction will be invested in completing projects necessary for the operation and maintenance of the system.
Additionally, Citigroup Global Markets priced the University of Massachusetts' $490.62 million project revenue and revenue refunding bonds.
The UMass $298.795 million Senior Series 2015-1 project revenue bonds were priced to yield from 2.45% with a 5% coupon in 2025 out to a 2036 split maturity priced as 5s to yield 3.10% and as 4s to yield 3.54%; a 2040 term bond was priced as 5s to yield 3.17% and a 2045 term was priced as 4s to yield 3.67%. The $191.825 million Senior Series 2015-2 refunding revenue bonds were priced to yield from 0.75% with a 3% coupon in 2017 to 3.54% with a 4% coupon in 2036. The issue is rated Aa2 by Moody's, AA-minus by S&P and AA by Fitch.
Secondary Market
Prices of top-quality municipal bonds were stronger at midday. The yield on the 10-year benchmark muni general obligation was down from one to three basis points from 2.07% on Tuesday, while the yield on 30-year GO was off as much as two basis points from 2.87%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were mixed. The yield on the two-year Treasury note rose to 0.61% from 0.56% on Tuesday while the 10-year yield increased to 1.99% from 1.98% and the 30-year yield was unchanged at 2.60%.
On Tuesday, the 10-year muni to Treasury ratio was calculated at 104.3% versus 101.0% on Monday, while the 30-year muni to Treasury ratio stood at 110.6% compared to 108.3%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $962.7 million to $12.334 billion on Wednesday. The total is comprised of $3.250 billion competitive sales and $9.084 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 41,820 trades on Tuesday on volume of $8.154 billion.
Most active on Tuesday, based on the number of trades, was the Winnebago and Boone Counties, Ill., School District No. 205's 2015 Series B 4s of 2035, which traded 142 times at an average price of 101.246, with an average yield of 3.832%.
