Prices of top-rated municipal bonds were stronger, according to traders, as yields on some maturities were off by as much as two basis points on the intermediate and long ends.
In the primary market, two large competitive sales from issuers in Florida and Colorado were sold while the Port Authority of New York and New Jersey was set to be priced and the New York City Transitional Finance Authority was priced for retail.
Secondary Market
Prices of top-quality munis were higher. The yield on the 10-year benchmark muni general obligation was down as much as two basis points from 1.97% on Monday, while the yield on the 30-year GO was off as much as two basis points from 2.84%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices also rose on Tuesday as the yield on the two-year Treasury note declined to 0.50% from 0.54% on Monday, while the 10-year yield dropped to 1.86% from 1.94% and the 30-year yield decreased to 2.50% from 2.58%.
On Monday, The 10-year muni to Treasury ratio was calculated at 101.8% versus 101.2% on Friday, while the 30-year muni to Treasury ratio stood at 110.0% compared to 110.2%.
Primary Market
In the competitive arena, the Florida Board of Education sold $258.50 million of 2015 Series D public education capital outlay refunding bonds. Goldman, Sachs won the issue with a true interest cost of 1.2824%. The bonds were priced as 5s to yield from 0.27% in 2016 to 1.71% in 2022. The bonds are rated Aa1 by Moody's and triple-A by S&P and Fitch.
The Florida BOE was last in the market on March 3 when it sold $231.83 million of 2015 Series B public education capital outlay refunding bonds to JPMorgan with a TIC of 2.1872%.
The Boulder Valley School District Number RE-2, Colo., competitively sold $250 million of Series 2015 general obligation bonds. Morgan Stanley won the issue with a TIC of 2.8571%. No other pricing information was immediately available. The deal is rated Aa1 by Moody's, AA by S&P and AA-plus by Fitch.
Boulder Valley last sold bonds competitively on Sept. 9, 2009, when Morgan Stanley won $54 million of Series 2009B GO refunding bonds with a TIC of 2.5553%.
In the negotiated sector, Bank of America Merrill Lynch is scheduled to price the Port Authority of New York and New Jersey's $775 million of consolidated bonds for retail investors followed by the institutional pricing on Wednesday. The deal will consist of 188th Series alternative minimum tax (AMT) bonds and 189th Series non-AMT bonds.
The issue is rated Aa3 by Moody's Investors Service and AA-minus by Standard & Poor's and Fitch Ratings.
"The Port Authority's excellent credit quality stems from its disciplined approach to financial management," said a Port Authority spokesperson, "which produces strong liquidity and debt service coverage, and benefits from the diversity of its operations and the vital role the Port Authority plays in moving people and goods throughout the New York and New Jersey region."
Proceeds of the sale will be used to refund approximately $525 million of consolidated bonds and to fund its ongoing capital program.
The Port Authority has sold roughly $31.29 billion of bonds since 1995, with the lowest issuance years coming in 2000 and 2001, when the authority sold $500 million and $650 million, respectively. The years that they issued the most debt were 2012 and 2014, when it came to market with $3.70 billion and $2.88 billion, respectively.
The Port Authority was last in the market in in October 2014 when it sold $650 million of consolidated bonds. The PANY/NJ said the proceeds of that sale were used to refund about $300 million of consolidated bonds and to fund the authority's ongoing capital program. Wells Fargo was the lead manager on the deal.
Loop Capital Markets held the first of a two-day retail order period on the New York City Transitional Finance Authority's $650 million of Fiscal 2015 Subseries E-1 future tax secured subordinate bonds.
The bonds were priced to yield 0.87% with 1%, 3% and 5% coupons in a 2018 triple split maturity to 3.02% with a 5% coupon in 2033. A 2042 split maturity was priced as 3 5/8s to yield 3.70% and as 5s to yield 3.21%. No retail orders were taken in 2030, 2031, 2034, 2035 and 2041. A 2017 maturity was offered as a sealed bid.
Another retail order period will be held Wednesday and the institutional pricing is slated for Thursday. The bonds are rated Aa1 by Moody's and triple-A by S&P and Fitch.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $1.449 billion to $13.260 billion on Tuesday. The total is comprised of $4.248 billion competitive sales and $9.012 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 34,877 trades on Monday on volume of $8.169 billion.
