Municipal bonds were stronger at mid-session, traders said, as they prepared for a second wave of new issuance to sweep into the market on Wednesday.
The yield on the 10-year benchmark muni general obligation fell one to three basis points from 2.18% on Tuesday, while the 30-year GO yield dropped two to four basis points from 3.06%, according to an early read of Municipal Market Data's triple-A scale.
U.S. Treasuries were mixed on Wednesday. The yield on the two-year Treasury rose to 1.28% from 1.26% on Tuesday, while the 10-year Treasury yield was unchanged from 2.29%, and the yield on the 30-year Treasury bond decreased to 2.95% from 2.98%.
On Tuesday, the 10-year muni to Treasury ratio was calculated at 95.2%, compared with 93.8% on Monday, while the 30-year muni to Treasury ratio stood at 102.8%, versus 101.3%, according to MMD.
MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 45,446 trades on Tuesday on volume of $9.30 billion.
Puerto Rico bonds mixed
Prices on some actively traded Puerto Rico general obligations turned mixed in Wednesday activity after Gov. Ricardo Rossello said he would use Title III, a bankruptcy-type process aimed at cutting the commonwealth’s $70 billion debt.
In midday trading, the Public Buildings Authority’s Series 2012 U government facilities revenue refunding 5 1/4s of 2042 were trading at a high price of 60 cents on the dollar in 10 trades totaling $15.44 million, according to the MSRB’s EMMA website. On Tuesday, the 5 1/4s of 2042 traded at a high price of 57.50 cents in 27 trades totaling $1.26 million.
The commonwealth’s GO refunding improvement bonds Series 2012A 5s of 2041 were trading at a high price of 60.80 cents on the dollar in 11 trades totaling $385,000. On Tuesday, the 5s of 2041 were trading at a high of 61.25 cents in 42 trades totaling $19.86 million.
And the commonwealth’s 2011 public improvement GO 5 3/4s of 2041 were trading at a high price of 61 cents on the dollar in two trades totaling $235,000. On Tuesday, the 5 3/4s were trading at a high of 60.75 cents in 10 trades totaling $1.06 million.
Jefferies is set to price the Regents of the University of California’s $1.13 billion deal for retail investors on Wednesday ahead of the institutional pricing on Thursday.
The issue consists of about $448 million of Series Av bonds, $186 million of Series AW taxables and $500 million of Series AX taxable fixed-rate notes.
The deal is rated Aa2 by Moody’s Investors Service and AA by S&P Global Ratings and Fitch Ratings.
Morgan Stanley priced the Trinity River of Texas’ Regional Wastewater System’s $286.61 million of Series 2017 revenue improvement and refunding bonds on Wednesday.
The issue was priced to yield from 1.09% with a 5% coupon in 2019 to 3.18% with a 5% coupon in 2037. The 2017 and 2018 maturities were offered as sealed bids.
The deal is rated AAA by S&P and AA-plus by Fitch.
Barclays Capital is expected to price the Massachusetts Water Resources Authority’s $300.48 million of Series 2017B general revenue bonds and Series 2017C general revenue refunding green bonds on Wednesday for retail investors ahead of the institutional pricing on Thursday.
The deal is rated Aa1 by Moody’s and AA-plus by S&P and Fitch.
In the competitive arena, New Castle County, Del., competitively sold $107.76 million of Series 2017 GOs on Wednesday.
Bank of America Merrill Lynch won the bonds with a true interest cost of 3.17%. The issue was priced to yield from 0.85% with a 5% coupon in 2018 to 3.51% with a 3.25% coupon in 2042; a 2047 term bond was priced as 4s to yield 3.51%.
The deal is rated triple-A by Moody’s, S&P and Fitch.
The city of Mesa, Ariz., is selling $171.06 million of bonds in two separate sales later in the day.
The deals consist of $123.88 million of Series 2017 utility system revenue bonds and $47.18 million of Series 2017 general obligation bonds.
Both deals are rated Aa2 by Moody’s and AA-minus by S&P.
Since 2007, Mesa has sold roughly $1.93 billion of securities, with the most issuance occurring in 2016 when it sold roughly $310 million. The lowest issuance year took place in 2015, when the city issued $61.5 million.
Bond Buyer visible supply
The Bond Buyer's 30-day visible supply calendar decreased $1.33 billion to $11.84 billion on Wednesday. The total is comprised of $3.72 billion of competitive sales and $8.13 billion of negotiated deals.