Prices of top-rated municipal bonds weakened slightly at mid-session, traders said, with yields on some maturities strengthening by as much as a basis point.
In the primary, a slew of new issues came to market a day ahead of the Federal Reserve’s decision on interest rates.
Secondary Trading
The yield on the 10-year benchmark muni general obligation was as much as one basis point stronger from 2.25% on Tuesday, while the yield on the 30-year GO was as much as one basis point stronger from 3.24%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were little changed on Wednesday, with the yield on the two-year Treasury note slipping to 0.78% from 0.79% on Tuesday, while the 10-year yield rose to 2.28% from 2.27% and the 30-year yield increased to 3.07% from 3.06%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 98.9% versus 102.3% on Monday, while the 30-year muni to Treasury ratio stood at 108.5% compared to 106.0%, according to MMD.
Primary Market
Municipal bond traders were seeing a busy day as the bulk of the week’s offerings were priced. The Federal Open Market Committee meets, beginning this afternoon, and will release its decision statement on Thursday, with Fed Chair Janet Yellen’s press conference following.
JPMorgan Securities priced the biggest deal of the week -- the Texas Transportation Commission’s $889.6 million of Series 2015A general obligation mobility fund refunding bonds.
The advance refunding was priced to yield from 0.94% with a 5% coupon in 2018 to 3.63% and 3.28% with 4% and 5% coupons in a split 2036 maturity.
The issue was rated triple-A by Moody’s Investors Service, Standard & Poor’s and Fitch Ratings.
Citigroup priced the Illinois’ Metropolitan Pier and Exposition Authority’s $220.25 million of bonds for the McCormick Place expansion project. The issue was comprised of $153.15 million of Series 2015A current interest bonds and capital appreciation bonds and $67.1 million of Series 2015B CIBs.
The 2015A CIBs were priced in a 2053 split maturity as 5s to yield 5.07% and as 5 1/2s to yield 4.85%. The Series 2015A CABs were priced in a 2052 split maturity as zeros to yield 5.50% and 6%. The 5.5% CABs were insured by AGM. The Series 2015B CIBs were priced as 5s to yield 4.57% in 2035, 4.75% in 2040, 4.87% in 2045 and 5.07% in 2052.
The bonds were rated BBB-plus by both S&P and Fitch except for the bonds insured by AGM, which were rated AA by S&P.
Citigroup also priced the Los Angeles Department of Water and Power’s $268.59 million of Series 2015B power system revenue bonds.
The issue was priced as 3s, 4s and 5s to yield 1.03% in a triple-split 2018 maturity. The bonds were rated Aa3 by Moody’s and AA-minus by S&P and Fitch.
And Citi priced the city of Philadelphia’s $187.24 million of GOs.
The bonds were priced as 5s to yield from 0.94% in 2017 to 3.84% in 2035; a 2016 maturity was offered as a sealed bid. The issue is rated A2 by Moody’s, A-plus by S&P and A-minus by Fitch.
Since 1995, Philadelphia has issued roughly $11.96 billion in bonds. The years of 2007 and 2010 saw the highest issuance, when it issued $1.35 billion and $1.36 billion, respectively. The City of Brotherly Love did not come to market at all in 1996 and 2000.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 37,483 trades on Tuesday on volume of $7.362 billion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $267.9 million to $8.95 billion on Wednesday. The total is comprised of $2.78 billion competitive sales and $6.17 billion of negotiated deals.
