Municipals mixed ahead of deals

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Municipals were mixed at mid-session as the market prepared to take on a spate of new supply on Wednesday.

Primary market
Bank of America Merrill Lynch is expected to price the Michigan Strategic Fund’s $595 million of limited obligation revenue bonds for the I-75 improvement project. The deal is rated Baa2 by Moody’s Investors Service and BBB by Kroll Bond Rating Agency.

Also Wednesday, Wells Fargo Securities is set to price South Carolina Jobs and Economic Development’s $587 million of hospital revenue bonds for the Prisma Health Obligated Group. The deal is rated A2 by Moody’s and A by S&P Global Ratings.

RBC Capital Markets is expected to price the Los Angeles Department of Water and Power’s $426 million of water system revenue bonds on Thursday after a one-day retail order period. The deal is rated Aa2 by Moody’s, AA-plus by S&P and AA by Fitch Ratings.

BAML is set to price the New Jersey Economic Development Authority’s $401 million of school facilities construction and refunding bonds on Thursday. The deal is rated Baa1 by Moody’s, BBB-plus by S&P and A-plus by Fitch.

In the competitive arena on Thursday, the Wentzville R-IV School District, Mo., is selling $159.82 million of Series 2018 general obligation refunding and improvement bonds under the Missouri Direct Deposit program.

Proceeds will be used to finance various school improvements and to current refund some outstanding debt. The financial advisor is Stifel while the bond counsel is Thompson Coburn.

Bond Buyer 30-day visible supply at $8.84B
The Bond Buyer's 30-day visible supply calendar decreased $496.4 million to $8.84 billion for Wednesday. The total is comprised of $2.23 billion of competitive sales and $6.61 billion of negotiated deals.

Secondary market
Municipal bonds were mostly stronger on Wednesday, according to a midday read of the MBIS benchmark scale. Benchmark muni yields fell as much as one basis point in the one- to nine-year, 14- to 17-year and 25- to 30-year maturities, rose less than a basis point in the 11- and 12-year and 19- to 22-year maturities and were unchanged in the 10-, 13-, 18-, 23- and 24-year maturities.

High-grade munis were also mostly stronger, with yields calculated on MBIS' AAA scale decreasing as much as two basis points in the one- to nine-year, 14-year and 25- to 30-year maturities, rising less than a basis point in the 10- to 13-year and 17- to 23-year maturities and remaining unchanged in the 15- and 16-year and 24-year maturities.

Municipals were steady on Municipal Market Data’s AAA benchmark scale, which showed the yield on both the 10-year muni general obligation and the yield on 30-year muni maturity remaining unchanged.

Treasury bonds were stronger as stocks traded higher. The Treasury 10-year stood at 3.126% while the Treasury three-month bill was at 2.374%.

On Tuesday, the 10-year muni-to-Treasury ratio was calculated at 86.3% while the 30-year muni-to-Treasury ratio stood at 101.2%, according to MMD. The muni-to-Treasury ratio compares the yield of tax-exempt municipal bonds with the yield of taxable U.S. Treasury with comparable maturities. If the muni/Treasury ratio is above 100%, munis are yielding more than Treasury; if it is below 100%, munis are yielding less.

Previous session's activity
The Municipal Securities Rulemaking Board reported 50,966 trades on Tuesday on volume of $11.27 billion.

California, New York and Texas were the municipalities with the most trades, with the Golden State taking 16.058% of the market, the Empire State taking 12.358% and the Lone Star State taking 10.079%.

Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Ziad Saba at 212-803-6079 for more information.

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Primary bond market Secondary bond market Michigan Strategic Fund South Carolina Jobs-Economic Development Authority Los Angeles Department of Water & Power State of California State of Texas State of New York