Municipal primary heating up as new deals line up for sale

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The municipal bond market is set to see primary action heat up on Wednesday with the pricing of several large deals from issuers in Texas and California.

Secondary market
U.S. Treasuries were little changed in early activity on Wednesday. The yield on the two-year Treasury dipped to 1.50% from 1.51% on Tuesday, the 10-year Treasury yield was steady from 2.34% and yield on the 30-year Treasury bond was unchanged from 2.87%.

Top-quality municipal bonds ended stronger on Tuesday. The yield on the 10-year benchmark muni general obligation fell one basis point to 2.01% from 2.02% on Friday, while the 30-year GO yield dropped one basis point to 2.82% from 2.83%, 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 85.9% compared with 85.4% on Friday, while the 30-year muni-to-Treasury ratio stood at 98.0% versus 97.5%, according to MMD.

MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 46,418 trades on Tuesday on volume of $7.71 billion.

Primary market
On Wednesday, Bank of America Merrill Lynch priced the Indiana Finance Authority’s $146.69 million of state revolving fund program green bonds in two series.

The $21.07 million of Series 2017B green bonds were priced as 5s to yield from 1.05% in 2020 to 2.19% in 2028.

The $125.62 million of Series 2017C refunding green bonds were priced as 5s to yield 0.90% in 2018 and from 1.17% in 2021 to 2.45% in 2031.

The deal is rated triple-A by Moody’s Investors Service, S&P Global Ratings and Fitch Ratings.

BAML is also is slated to price the North Texas Tollway Authority’s $2.57 billion of system revenue and refunding bonds for retail investors ahead of the institutional pricing on Thursday.

The issue is composed of Series 2017A first tier bonds and Series 2017B second tier bonds.

The Series 2017A bonds are rated A1 by Moody’s and A by S&P while the Series 2017B bonds are rated A2 by Moody’s and A-minus by S&P.

Also coming Wednesday is an $897 million deal from the airport commission of the city and county of San Francisco.

Jefferies is expected to price the issue for the San Francisco International Airport, which is composed of Series 2017A, Series 2017D and Series 2018A bonds subject to the alternative minimum tax, Series 2017 non-AMT bonds and Series 2017C taxables.

The bonds are rated A1 by Moody’s and A-plus by S&P and Fitch Ratings.

Since 2008 the commission has sold $7.45 billion of securities, with the most issuance occurring in 2008 when it sold $1.48 billion. It did not come to market at all in 2015.
In the competitive arena on Wednesday, Texas A&M University Board of Regents is selling $399.78 million of permanent university fund bonds in two offerings consisting of $309.83 million Series 2017B taxables and $89.95 million of Series 2017A tax-exempts.

Both deals are rated triple-A by Moody’s, S&P and Fitch.

And the state of Ohio will sell $265 million of bonds in two sales consisting of $175 million of Series 2017A tax-exempt infrastructure improvement general obligation bonds and $90 million of Series 2017A taxable Third Frontier Research and Development taxable GOs.

The deals are rated Aa1 by Moody’s and AA-plus by S&P and Fitch.

In the short-term competitive sector on Wednesday, the Louisville and Jefferson County Metropolitan Sewer District, Ky., is selling $226.34 million of Series 2017 sewer and drainage system subordinated bond anticipation notes.

The BANs are rated SP1-plus by S&P.

Bond Buyer reports 30-day visible supply
The Bond Buyer's 30-day visible supply calendar increased $1.84 billion to $12.21 billion on Wednesday. The total is comprised of $6.699 billion of competitive sales and $5.52 billion of negotiated deals.

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Primary bond market Secondary bond market North Texas Tollway Authority San Francisco Airport Commission Texas A&M University System Board of Regents State of Ohio Louisville and Jefferson County Metropolitan Sewer District, KY Indiana Finance Authority