Municipal bonds were mixed on Wednesday. Yields were as many as two basis points higher, though they were unchanged on most maturities, according to traders.
Primary Market
Some issuers took their deals to the market despite higher yields, while others placed their transactions on the day-to-day calendar.
"The market has found buyers at adjusted levels, as things have stabilized and forced selling is down," said a New York trader. "With a lot of deals having been moved and unlikely to come back very soon, the market has a much better tone then it did the past three or four days."
Morgan Stanley priced the Salt River Project Agricultural Improvement and Power District, Az.'s $767.82 million of electric system refunding revenue bonds, 2016 series A for institutions. The bonds were priced to yield from 1.41% with a 5% coupon in 2020 to 3.14% with a 5% coupon in 2034. A term bond in 2036 was priced to yield 3.59% with a 4% coupon and to yield 3.21% with a 5% coupon in a split maturity. A term bond in 2038 was priced to yield 3.65% with a 4% coupon and to yield 3.26% with a 5% coupon in a split maturity. The deal is rated Aa1 by Moody's Investors Service and AA by S&P Global Ratings.
Since 2006, the Salt River Project has sold roughly $5.24 billion of securities, with the largest issuance occurring in 2009 when it issued a little more than $1 billion. The district did not issue any bonds in 2007, 2013 or 2014.
Raymond James priced the city of Columbia, S.C., Waterworks and Sewer System's $122.295 million of refunding revenue bonds. The transaction was priced to yield from 1.02% with a 4% coupon in 2018 to 3.61% with a 4% coupon in 2036. A term bond in 2041 was priced to yield 3.71% with a 4% coupon. The 2017 maturity was offered as a sealed bid. The deal is rated Aa1 by Moody's and AA-plus by S&P.
Morgan Stanley also priced Cincinnati, Ohio's $120.02 million of water system refunding and revenue bonds. The $25 million of revenue bonds were priced to yield from 2.59% with a 5% coupon in 2027 to 3.19% with a 5% coupon in 2036. A term bond in 2041 was priced to yield 3.29% with a 5% coupon and a term bond in 2046 was priced to yield 3.36% with a 5% coupon.
The $29.87 million of refunding revenue bonds, series 2016B were priced to yield from 2.17% with a 5% coupon in 2024 to 2.70% with a 5% coupon in 2028. The $65.15 million of refunding revenue bonds, Series 2016C were priced to yield from 1.80% with a 5% coupon in 2022 to 3.48% with a 4% coupon in 2034. The deal is rated triple-A by Moody's and S&P.
Bank of America Merrill Lynch priced the Los Angeles County Metropolitan Transportation Authority's $513.99 million of measure R senior sales tax revenue bonds for retail investors. The bonds were priced to yield from 1.01% with a 5% coupon in 2018 to 3.64% with a 3.50% coupon in 2039. No retail orders were taken in 2028 through 2030, 2032 or 2034 through 2038 maturities. The 2017 maturity was offered as a sealed bid. The deal is rated Aa1 by Moody's and triple-A by S&P.
Secondary Market
Munis were mixed on Wednesday, as the yield on the 10-year benchmark muni general obligation was two basis points higher to 2.21% from 2.19% on Tuesday, while the yield on the 30-year was steady at 3.01%, according to a final read of Municipal Market Data's triple-A scale.
U.S. Treasuries were mostly stronger at the close on Wednesday. The yield on the two-year was flat at 1.00% from Tuesday, the 10-year Treasury was lower at 2.22% from 2.23%, while the yield on the 30-year Treasury bond decreased to 2.92% from 2.96%.
The 10-year muni to Treasury ratio was calculated at 99.5% on Wednesday compared to 97.9% on Tuesday, while the 30-year muni to Treasury ratio stood at 102.9% versus 101.3%, according to MMD.
