Prices of top-rated municipal bonds were mostly stronger at mid-session, traders said, as several large issues were priced in the primary.
Leading the pack were $1 billion of bonds from the New York City Transitional Finance Authority and over $1 billion of notes from the state of Massachusetts.
Secondary Market
The yield on the 10-year benchmark muni general obligation was as much as two basis points weaker from 2.15% on Monday, while the yield on the 30-year GO was as much as two basis points weaker from 3.13%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were higher, with the yield on the two-year Treasury note dropping to 0.67% from 0.71% on Monday, while the 10-year yield declined to 2.13% from 2.20% and the 30-year yield decreased to 2.94% from 3.03%.
The 10-year muni to Treasury ratio was calculated on Monday at 97.1% versus 100.6% on Friday, while the 30-year muni to Treasury ratio stood at 103.2% compared to 106.9%, according to MMD.
Primary Market
The NYC TFA sold a total of $1 billion in the negotiated and competitive sectors on Tuesday.
Goldman Sachs priced the TFA's $750 million of Fiscal 2016 Series A-1 future tax secured tax-exempt subordinate bonds for institutions after holding a two-day retail order period.
The bonds were priced to yield from 0.89% with 3% and 5% coupons in a split 2018 maturity to 3.74% with a 3.625% coupon in 2039. The 2017 maturity was offered as a sealed bid.
In the competitive arena, the TFA sold $250 million taxable future tax secured subordinate bonds in two separate sales on Tuesday.
Bank of America Merrill Lynch won the $190 million of Fiscal 2016 Series A Subseries A2 taxables with a true interest cost of 2.71%. The issue was priced at par to yield from 1.04% in 2017 to 3.16% in 2025.
Wells Fargo Securities won the $60 million of Fiscal 2016 Series A Subseries A3 taxables with a TIC of 3.53%. The issue was priced as 3.45s to yield 3.35% in 2026 and at par to yield 3.50% in 2027.
All the TFA issues are rated Aa1 by Moody's Investors Service and triple-A by Standard & Poor's and Fitch Ratings.
In the short-term competitive sector, the state of Massachusetts sold three separate note deals totaling $1.2 billion on Tuesday.
There were four winning bids on the $400 million of Series 2015A general obligation revenue anticipation notes. JPMorgan Securities took $50 million with a coupon of 2% and a premium of $541,000, an effective rate of 0.123166%; JPMorgan also took $125 million with a coupon of 2% and a premium of $1,348,750, an effective rate of 0.128370%. BAML took $75 million with a coupon of 2% and a premium of $810,750, an effective rate of 0.124900%. And Morgan Stanley took $150 million with a coupon of 2% and a premium of $1,638,000, an effective rate of 0.105820%.
There were nine winning bids on the $400 million of Series 2015B GO RANs. Pricing details were not immediately available.
And there were eight winning bids on the $400 million of Series 2015C GO RANs. BAML took $100 million with a coupon of 2% and a premium of $1,338,000, an effective rate of 0.165888%; BAML also took $100 million with a coupon of 2% and a premium of $1,331,000, an effective rate of 0.175483%; BAML also took $25 million with a coupon of 2% and a premium of $330,750, an effective rate of 0.186449%. Wells Fargo took $50 million with a coupon of 2% and a premium of $665,000, an effective rate of 0.176854%; Wells also took $50 million with a coupon of 2% and a premium of $667,000, an effective rate of 0.171371%; and Wells took $25 million with a coupon of 2% and a premium of $331,250, an effective rate of 0.183708%. Citigroup took $25 million with a coupon of 2% and a premium of $333,000, an effective rate of 0.174112%; Citi also took $25 million with a coupon of 2% and a premium of $331,750, an effective rate of 0.180966%.
There were 37 bids for the Series A RANs, 33 bids for the Series B notes and 32 bids for the Series C notes.
The RANs are rated MIG1 by Moody's, SP1-plus by S&P and F1-plus by Fitch.
Including these issues, Massachusetts has sold about $12.8 billion of notes since 1995, with the largest issuance coming in 2014 when it sold $1.275 billion. The Bay State sold no notes at all in 1997-98 or in 2005-06.
Citigroup priced Wayne County Airport Authority, Mich.'s $521.28 million of new money and refunding bonds.
The $214.34 million of Series 2015D airport revenue non-alternative minimum tax bonds were priced to yield from 1.47% with a 3% coupon in 2018 to 3.89% with a 5% coupon in 2035. A split 2040 term bond was priced as 5s to yield 3.91% and 4.06%. A split 2045 term bond was priced as 5s to yield 3.98% and 4.13%. The 2032, 2040 and 2045 maturities were insured by Assured Guaranty Municipal Corp.
The $7.30 million of Series 2015E AMT airport revenue bonds were priced as 5s to yield 4.31% in 2038.
The $224.63 million of Series 2015F AMT airport revenue refunding bonds were priced as 5s to yield from 3.47% in 2025 to 4.15% in 2034.
The $75.01 million of Series 2015G non-AMT airport revenue refunding bonds were priced to yield from 0.73% with a 2% coupon in 2016 to 3.93% with a 5% coupon in 2036.
The senior lien bonds are rated A2 by Moody's, A by S&P and A-minus by Fitch except for the maturities which are insured by AGM, which are rated A2 by Moody's and AA by S&P. All three agencies maintain a stable outlook on the credit.
Including this sale, the authority has issued about $3.6 billion of bonds since 2003, with the largest offering coming in 2010 when it sold $722.8 million. The airport authority did not issue any debt in 2006, 2008 or 2012.
Wells Fargo Securities priced the San Francisco Bay Area Transit District's $187.38 million of Series 2015A sales tax refunding bonds.
The Series 2015A sales tax refunding bonds were priced to yield from 0.88% with a 4% coupon in 2018 to 3.07% with a 5% coupon in 2034. The 2016 and 2017 maturities were offered as sealed bids. The bonds were rated AA-plus by S&P and Fitch.
On Thursday, Wells will price BART's $171 million of general obligation refunding bonds, which are rated triple-A by Moody's and S&P.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 33,739 trades on Monday on volume of $5.210 billion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $2.03 billion to $8.77 billion on Tuesday. The total is comprised of $2.90 billion competitive sales and $5.87 billion of negotiated deals.
