Municipal bond traders are watching falling long-term yields as they wait for a second wave of new deals to hit the market on Wednesday, led by issuers in New York and California.
Secondary Market
U.S. Treasuries were lower on Wednesday. The yield on the two-year Treasury rose to 0.85% from 0.82% on Tuesday, while the 10-year Treasury yield gained to 1.79% from 1.76% and the yield on the 30-year Treasury bond increased to 2.60% from 2.59%.
Top-rated municipal bonds strengthened on Tuesday. The yield on the 30-year general obligation scale fell three basis points to a record low of 2.39% from the previous low of 2.42% set last week, according to the final read of Municipal Market Data's triple-A scale.
The yield on the 10-year benchmark muni was unchanged from 1.54% on Monday, according to MMD. Its all-time low of 1.47% was set in November 2012.
The 10-year muni to Treasury ratio was calculated at 87.6% on Tuesday compared to 87.9% on Monday, while the 30-year muni to Treasury ratio stood at 92.4% versus 93.2%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 39,585 trades on Tuesday on volume of $10.81 billion.
Primary Market
Bank of America Merrill Lynch is set to price New York City's $800.13 million of Fiscal 2016 Series E and F GOs for institutions on Wednesday after holding a two-day retail order period.
The $774.04 million of Series E bonds were priced on Tuesday for retail to yield from 0.86% with a 5% coupon in 2019 to 2.90% with a 3% coupon in 2036; the 2017 and 2018 maturities were offered as sealed bids. No retail orders were taken in the 2027-2032 maturities.
The $26.10 million of Series F bonds were priced for retail on Tuesday to yield from 0.86% with a 3% coupon in 2019 to 2.79% with a 3% coupon in 2034; the 2016-2018 maturities were offered as sealed bids.
The NYC GOs are rated Aa2 by Moody's Investors Service and AA by S&P Global Ratings and Fitch Ratings.
Roosevelt & Cross is expected to price the Dormitory Authority of the State of New York's $209.22 million of Series E, F, G, H, I and J school district bonds on Wednesday.
Goldman Sachs is set to price the Los Angeles Municipal Improvement Corp.'s $800.22 million of Series 2016A and Series 2016B lease revenue refunding bonds.
The deal is rated A-plus by S&P and Fitch and AA-minus by Kroll Bond Rating Agency.
Since 2006, LAMIC has issued about $2.69 billion of debt, with the largest issuance before this year occurring in 2006 when it sold $449 million of securities. LAMIC did not issue any bonds in 2011 or 2013.
Piper Jaffray is expected to price the Illinois State Toll Highway Authority's $300 million of Series 2016B told revenue bonds on Wednesday.
Citigroup is set to price El Paso, Texas' $125 million of GO refunding bonds on Wednesday.
Morgan Stanley is expected to price the Alamo Regional Mobility Authority, Texas' $115.95 million of Series 2016 senior lien vehicle registration fee revenue bonds and Series 2016 junior lien vehicle registration fee revenue bonds.
In the competitive arena, the Virginia College Building Authority is selling $451.22 million of bonds in two separate sales consisting of $410.98 million of Series 2016A educational facilities revenue bonds and $40.24 million of Series 2016C taxable educational facilities revenue bonds, both for the 21st Century College and Equipment Program. The bonds are rated Aa1 by Moody's and AA-plus by S&P and Fitch.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $3.96 billion to $13.53 billion on Wednesday. The total is comprised of $6.13 billion of competitive sales and $7.40 billion of negotiated deals.
