Prices of top-quality municipal bonds weakened at mid-session, traders said, as some large new deals hit the market from California and Ohio.
The state of California is selling $960.96 million of various purpose general obligation and refunding bonds in three separate competitive sales on Tuesday.
JPMorgan Securities won the $105.96 million of Bid Group A taxable various purpose GOs with a true interest cost of 0.61%. Pricing information was not immediately available.
Goldman Sachs won the $322.5 million of Bid Group B tax-exempt various purpose refunding GOs with a TIC of 1.66%. Pricing information was not immediately available.
Still ahead, the state will sell $532.5 million of Bid Group C tax-exempt various purpose refunding GOs.
All three offerings from the Golden State were rated Aa3 by Moody’s, AA-minus by S&P and A-plus by Fitch.
The state of Ohio was also in the competitive arena with the sale of $300 million Series 2015C higher education GOs. Citigroup won the bonds with a TIC of 3.11%.
The issue was priced to yield from 0.32% with a 2% coupon in 2016 to 3.01% with a 5% coupon in 2035. The Buckeye State bonds were rated Aa1 by Moody’s and AA-plus by S&P and Fitch.
This week, the New York City Transitional Finance Authority is coming to market with the biggest offering -- $1 billion of bonds altogether, consisting of a large negotiated deal and two smaller competitive sales.
On Tuesday, JPMorgan Securities set the second day of a two-day retail order period for the TFA’s $749.28 million of future tax secured subordinate bonds with no changes to the scale that was set on Monday. The deal is scheduled to be priced for institutions on Wednesday.
The $350 million of Fiscal 2016 Subseries B-1 bonds were priced for retail as 5s to yield 3.19% in 2035 and as 3 5/8s to yield 3.67% in 2039; no retail orders were taken in the 2028-2034 or 2036-2038 maturities.
The $346.94 million of Fiscal 2016 Series C bonds were priced for retail to yield from 0.83% with a 5% coupon in 2018 to 3.13% with a 3% coupon in 2030; a 2017 maturity was offered as a sealed bid.
The $52.34 million of Fiscal 2016 Series D bonds were priced for retail to yield from 0.83% with a 3% coupon in 2018 to 3.13% with a 3% coupon in 2030; the 2016 and 2017 maturities were offered as sealed bids.
These bonds were rated Aa1 by Moody’s Investors Service and triple-A by both Standard & Poor’s and Fitch Ratings.
On Wednesday, the TFA will offer $250 million of bonds in two competitive sales consisting of $198.32 million of Series B, Subseries B-2 taxable bonds and $51.69 million of Series B, Subseries B-3 taxable bonds. These bonds were rated triple-A by Fitch.
Since 1995, the TFA has issued about $39.32 billion of debt. The years of 2011 and 2012 saw the most issuance with $6.05 billion and $5.66 billion, respectively. The lowest years of issuance were in 2006 and 2008, when the authority sold $1.45 billion and $1.32 billion of bonds, respectively.
Also on Tuesday, RBC Capital Markets is expected to price the Tacoma School District No. 10, Pierce County, Wash.’s $370 million of Series 2015 unlimited tax GO and refunding bonds. The issue was rated Aa1 by Moody’s and AA-plus by S&P.
And BAML is set to price on Tuesday the South Carolina State Port Authority’s $288 million of Series 2015 revenue bonds, subject to the alternative minimum tax. The issue was rated A1 by Moody’s and A-plus by S&P.
Secondary Market
Municipal bond prices were lower on Tuesday. The yield on the 10-year benchmark muni general obligation was as much as one basis point stronger from 2.02% on Monday, while the yield on the 30-year GO was as much as one basis point stronger from 3.07%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were also lower on Tuesday, with the yield on the two-year Treasury gaining to 0.63% from 0.60% on Monday, while the 10-year yield rose to 2.07% from 2.02% and the 30-year yield increased to 2.92% from 2.88%.
The 10-year muni to Treasury ratio was calculated on Monday at 99.7% versus 98.6% on Friday, while the 30-year muni to Treasury ratio stood at 106.6% compared to 106.6%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 31,996 trades on Monday on volume of $4.20 billion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $1.64 billion to $12.67 billion on Tuesday. The total is comprised of $3.86 billion competitive sales and $8.81 billion of negotiated deals.
