Prices of top-shelf municipal bonds were weaker at mid-session, traders said, as the state of Minnesota sold more than $1 billion of bonds in the competitive arena.
Secondary Market
The yield on the 10-year benchmark muni general obligation on Wednesday was up one to three basis points from 2.21% on Tuesday, while the yield on the 30-year GO rose one to three basis points from 3.10%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were lower on Wednesday, with the yield on the two-year Treasury note rising to 0.73% from 0.72% on Tuesday, while the 10-year yield rose to 2.28% from 2.21% and the 30-year yield increased to 2.95% from 2.89%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 100.1% versus 102.0% on Monday, while the 30-year muni to Treasury ratio stood at 107.5% compared to 108.8%, according to MMD.
Primary Market
Minnesota competitively sold five separate offerings totaling over $1 billion.
Barclays Capital won the $386.50 million of Series 2015D general obligation state various purpose refunding bonds with a true interest cost of 2.18%. Pricing information was not immediately available.
Citigroup won the $376.11 million of Series 2015A GO state various purpose refunding bonds with a TIC of 2.93%. The bonds were priced to yield from 0.254% with a 2% coupon in 2016 to 2.94% with a 5% coupon in 2035.
Bank of America Merrill Lynch won the $310 million of Series 2015B GO state trunk highway bonds with a TIC of 2.88%. The bonds were priced to yield from 0.27% with a 3% coupon in 2016 to 3.46% with a 3.375% coupon in 2035.
Robert W. Baird won the $14.89 million of Series 2015E GO state trunk highway refunding bonds with a TIC of 2.14%. No information was immediately available.
Wells Fargo Securities won the $7.2 million of Series 2015C taxable GO state various purpose bonds with a TIC of 2.43%. The bonds were priced to yield from 0.45% with a 1% coupon in 2016 to 3.00% at par in 2025.
All the issues were rated Aa1 by Moody's Investors Service and AA-plus by Fitch Ratings.
The bond proceeds will be used to finance infrastructure work across the state as well as for transportation-related projects.
The bonds will also refund some outstanding debt. Public Resources Advisory Group is the financial advisor and Kutak Rock is the bond counsel. The state expects net present value savings of about $44 million on the refunding series, a finance official told The Bond Buyer.
The state last competitively sold comparable bonds on Aug. 12, 2014, when Bank of America Merrill Lynch won $429.67 million of Series 2014A GO state various purpose bonds with a true interest cost of 2.83%.
Since 1995, the state has issued roughly $17.14 billion of debt. The years of 2009 and 2010 saw the most issuance with $1.71 billion and $1.77 billion, respectively. The North Star State had low issuance years of 1997 and 1999, when they came to market with $226 million and $185 million, respectively.
Loudoun County, Va., competitively sold $117.53 million of Series 2015 water and sewer system revenue and refunding bonds. JPMorgan won the bonds with a TIC of 3.39%. Pricing information was not immediately available. The issue is rated triple-A by Moody's, Standard & Poor's and Fitch.
In the negotiated sector, Bank of America Merrill Lynch priced the Wyoming Community Development Authority's $114.33 million of housing revenue bonds in three series. The $47.57 million of Series 2015-4 AMT bonds, due June 1 and Dec. 1, were priced at par to yield from 0.70% and 0.80% in a split 2016 maturity to 3.45% and 3.50% in a split 2025 maturity; a 2030 term bond was priced at 100.25 to yield 4%. The $18.76 million of Series 2015-5 non-AMT bonds, due June 1 and Dec. 1, were priced at par to yield 2.45% and 2.55% in a split 2022 maturity to 3.30% in 2027; a 2030 term was priced as 3 5/8s to yield 3.70% and a 2034 term was priced at par to yield 3.90%. The $48 million of Series 2015-6 non-AMT bonds were priced as 3 5/8s to yield 3.70% on Dec. 1, 2030, at par to yield 3.90% on Dec. 1, 2034 and as 4s to yield 2% on June 1, 2045. The issue was rated Aa1 by Moody's and AA-plus by S&P.
Wells Fargo received the official award on the Hillsborough County School Board, Fla.'s $100.63 million of master lease program refunding certificates of participation. The COPs were priced to yield from 0.46% with a 2% coupon in 2016 to 3.65% with a 3.50% coupon and 3.39% with a 5% coupon in a split 2031 maturity. The issue was rated Aa2 by Moody's, AA-minus by S&P and AA by Fitch.
FirstSouthwest received the official award on the $164.58 million Denton Independent School District, Texas' Series 2015A unlimited tax school building bonds. The issue was priced to yield from 0.30% with a 2% coupon in 2016 to 3.14% with a 5% coupon in 2035; a 2040 term bond was priced as 5s to yield 3.28% and a 2045 term was priced as 5s to yield 3.35%. The issue was backed by the Texas Permanent School Fund guarantee program, and rated triple-A by S&P and Fitch.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 43,962 trades on Tuesday on volume of $6.923 billion. The most active bond, based on the number of trades, was the Connecticut Series 2015E GO 5s of 2026, which traded 158 times at an average price of 118.893, an average yield of 2.81%. The bonds were initially priced at 118.893 to yield 2.81%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar was down $1.84 billion to $9.02 billion on Wednesday. The total is comprised of $2.99 billion competitive sales and $6.03 billion of negotiated deals.
