Top quality municipal bonds were substantially stronger at mid-session, according to traders, with yields on some maturities weakening by as much as six basis points.
The yield on the 10-year benchmark muni general obligation was three to five basis points weaker from 1.70% on Monday, while the 30-year muni yield was four to six basis points weaker from 2.68%, according to a 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 2.56% from 2.61%.
The 10-year muni to Treasury ratio was calculated on Monday at 95.7% compared with 95.0% on Friday, while the 30-year muni to Treasury ratio stood at 102.8% versus 102.3%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 35,473 trades on Monday on volume of $7.52 billion.
The 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 did not come to market in 2008.
JP Morgan priced Fairfax County, Va.’s $131.47 million of Series 2016A sewer revenue refunding bonds. The issue was priced to yield 0.99% with a 3% coupon in 2020 to 3.07% with a 3% coupon in 2039. The deal is rated triple-A by Moody’s, S&P and Fitch.
In the competitive arena on Tuesday, the city and county of San Francisco, Calif., sold $179.42 million of Series 2016C, D and E general obligation various purpose bonds.
Citigroup won the deal 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, $110.06 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%. Pricing information was not immediately available. The bonds are rated Aa1 by Moody’s and triple-A by S&P and Fitch.
Citi is expected to price Lubbock, Texas’ $124 million of GO refunding and tax and waterworks system surplus revenue certificates. The issue is rated Aa2 by Moody’s and AA-plus by S&P and Fitch.
Raymond James & Associates is set to price the Burleson Independent School District, Texas’ $121.42 million of unlimited tax refunding bonds backed by the Permanent School Fund guarantee program. The bonds are rated triple-A by Moody’s and S&P.
Citi is set to price the Tarrant County, Texas, Cultural Education Facilities Corp.’s $372 million of tax-exempt hospital revenue bonds for Baylor Scott & White Health for retail investors on Tuesday. The deal is part of a $912 million issue which also consists of $540 million of taxable corporate CUSIP bonds. The issue is slated to be priced for institutions on Wednesday. The bonds are rated Aa3 by Moody’s and AA-minus by S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $502.3 million to $10.47 billion on Tuesday. The total is comprised of $2.55 billion of competitive sales and $7.92 billion of negotiated deals.
