Top rated municipal bonds finished stronger on Tuesday, according to traders, with yields on some maturities falling by as much as seven basis points.
The yield on the 10-year benchmark muni general obligation fell seven basis points to 1.63% from 1.70% on Monday, while the 30-year muni yield dropped seven basis points to 2.61% from 2.68%, according to the final read of Municipal Market Data's triple-A scale.
U.S. Treasuries were also stronger on Tuesday. The yield on the two-year Treasury fell to 0.72% from 0.74% on Monday, while the 10-year Treasury yield dropped to 1.73% from 1.78% and the 30-year Treasury bond yield declined to 2.55% from 2.61%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 94.5% compared with 95.7% on Monday, while the 30-year muni to Treasury ratio stood at 102.4% versus 102.3%, according to MMD.
Primary Market
Jefferies offered the University of Connecticut's $340.62 million of general obligation bonds to retail investors for a second day ahead of the institutional pricing on Wednesday.
The $259.43 million of Series 2016A GOs were priced on Tuesday for retail to yield from 1.09% with 4% and 5% coupons in a split 2019 maturity to 3.21% with a 4% coupon in 2036. No retail orders were taken in the 2029-2032 or 2034-2035 maturities. The 2017 and 2018 maturities were offered as sealed bids.
The $81.19 million of Series 2016A refunding GOs were priced for retail as 5s to yield from 1.09% in 2019 to 2.32% in 2027. The 2017 and 2018 maturities were offered as sealed bids.
The issue is rated Aa3 Moody's Investors Service, AA by Standard & Poor's and AA-minus by Fitch Ratings.
Since 2006, UConn has sold about $1.92 billion of bonds with the most issuance prior to this sale occurring in 2015 when it sold $254.8 million of bonds. The university didn't come to market in 2008.
JPMorgan priced Fairfax County, Va.'s $131.47 million of Series 2016A sewer revenue refunding bonds. The issue was priced to yield from 0.99% with a 3% coupon in 2020 to 3.05% with a 3% coupon in 2039. The deal is rated triple-A by Moody's, S&P and Fitch.
Citigroup priced Lubbock, Texas' $124.6 million of Series 2016 GO refunding bonds and tax and waterworks system surplus revenue certificates of obligation. The $26.51 million of GOs were priced to yield 0.60% with a 5% coupon in 2016 and to yield from 1.16% with a 5% coupon in 2020 to 3.08% with a 3% coupon in 2034. The $98.09 million of COOs were priced to yield from 0.60% with a 5% coupon in 2017 to 3.18% with a 3% coupon in 2036. The deal is rated Aa2 by Moody's and AA-plus by S&P and Fitch.
In the competitive arena on Tuesday, the city and county of San Francisco, Calif., sold $178.96 million of Series 2016C, D and E general obligation various purpose bonds.
Citigroup won the bonds with a true interest cost of 2.57%. The issue was comprised of $25.22 million of Series 2016C earthquake safety and emergency response GOs, $109.60 million of Series 2016D earthquake safety and emergency response GOs, and $44.15 million of Series 2016E road repaving and street safety GOs. Each series was priced to yield from 0.40% with a 5% coupon in 2016 to 3.01% with a 3% coupon in 2035. The deal is rated Aa1 by Moody's and AA-plus by S&P and Fitch.
The Florida Department of Transportation competitively sold $161.77 million of Series 2016A full faith and credit right of way acquisition and bridge construction refunding bonds.
Morgan Stanley won the deal with a TIC of 2.41%. The issue was priced to yield from 0.58% with a 5% coupon in 2017 to 3.10% with a 3% coupon in 2037. The bonds are rated Aa1 by Moody's and triple-A by S&P and Fitch.
