Municipal bond traders will be watching the primary on Wednesday as they prepare for a little more supply to head their way as the Federal Reserve gets set to announce its decision on interest rates this afternoon.
Secondary Market
U.S. Treasuries were weaker on Wednesday. The yield on the two-year Treasury rose to 1.24% from 1.20% on Monday, while the 10-year Treasury gained to 2.49% from 2.45%, and the yield on the 30-year Treasury bond increased to 3.08% from 3.05%.
The Federal Open Market Committee meeting ends Wednesday. Having raised the target range for the federal funds rate to ½-to-3/4 percent at its last meeting, the FOMC is expected to take no action on rates at this meeting, though economists expect the panel to raise the target three times this year.
On Tuesday, the 10-year benchmark muni general obligation yield fell one basis point to 2.32% from 2.33% on Monday, while the yield on the 30-year GO was unchanged from 3.08%, according to the final read of Municipal Market Data's triple-A scale.
On Tuesday, the 10-year muni to Treasury ratio was calculated at 94.7% compared to 93.8% on Monday, while the 30-year muni to Treasury ratio stood at 100.9%, versus 100.0%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 40,006 trades on Monday on volume of $8.08 billion.
Primary Market
Action is expected to remain subdued ahead of the Fed; this week's new issue slate is estimated at $4.03 billion.
Wells Fargo Securities is set to price the Oklahoma Turnpike Authority's $479.83 million of Series 2017A second senior revenue bonds and Series 2017B refunding second senior revenue bonds for institutions on Wednesday after holding a retail order period on Tuesday.
The Series 2017A bonds were priced for institutions to yield from 3.57% with a 3.5% coupon and as 5s with a 3.15% coupon in a split 2032 maturity to 3.40% with a 5% coupon in 2038; a split 2042 maturity was priced as 4s to yield 3.90% and as 5s to yield 3.43%; and a 2047 maturity was priced as 4s to yield 3.95%.
The Series 2017B bonds were priced to yield from 0.93% with a 3% coupon in 2018 to 1.86% with 2% and 3% coupons in a split 2022 maturity.
The deal is rated Aa3 by Moody's Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.
Since 2007, the Oklahoma Turnpike Authority has issued about $1.31 billion of debt, with the largest issuance occurring in 2011 when it sold roughly $684 million of debt. The system did not come to market at all from 2008 through 2010 and from 2013 through 2016.
Raymond James is expected to price the Aldine Independent School District, Texas' $124.11 million of unlimited tax refunding bonds. The deal, which is backed by the Permanent School Fund guarantee program, is rated triple-A by Moody's and S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $356.3 million to $8.74 billion on Wednesday. The total is comprised of $1.77 billion of competitive sales and $6.97 billion of negotiated deals.
