Top-rated municipal bonds were stronger at mid-session, according to traders, as the first of the week's new issues hit the screens ahead of the Federal Reserve meeting on monetary policy.
The Federal Open Market Committee meets on Tuesday and Wednesday. Having raised the target range for the federal funds rate to 1/2 to 3/4 percent at its last meeting, the FOMC is expected to take no action on rates at this meeting, despite the expectation the panel will raise the target three times this year.
Secondary Market
The 10-year benchmark muni general obligation yield was as much as one basis point weaker from 2.33% on Friday, while the yield on the 30-year GO was as much as one basis point weaker from 3.08%, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were stronger on Tuesday. The yield on the two-year Treasury dipped to 1.20% from 1.21% on Monday, while the 10-year Treasury yield fell to 2.44% from 2.48%, and the yield on the 30-year Treasury bond decreased 3.05% from 3.08%.
On Monday, the 10-year muni to Treasury ratio was calculated at 93.8% compared to 94.0% on Friday, while the 30-year muni to Treasury ratio stood at 100.0%, versus 100.7%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 40,006 trades on Monday on volume of $8.08 billion.
Primary Market
This week's new issue slate is estimated at $4.03 billion, comprised of $3.37 billion of negotiated deals and $661.4 million of competitive sales.
Barclays Capital priced the New York City Municipal Water Finance Authority's $342.1 million of Fiscal 2017 Series DD water and sewer system second general resolution revenue bonds for institutional investors after a one-day retail order period on Monday.
The deal was offered to institutions as a four-way split 2047 maturity and priced as 3 3/4s to yield 3.88%, as 4s to yield 3.83% and as 5s to yield 3.53%, and as 5 1/4s to yield 3.43%.
The bonds are rated Aa1 by Moody's Investors Service and AA-plus by S&P Global Ratings and Fitch Ratings.
Wells Fargo Securities priced the Oklahoma Turnpike Authority's $480 million of Series 2017A second senior revenue bonds and Series 2017B refunding second senior revenue bonds for retail investors on Tuesday, ahead of the institutional pricing on Wednesday.
The Series 2017A bonds were priced to yield from 3.57% with a 3.5% coupon and as 5s with a 3.20% coupon in a split 2032 maturity to 3.88% with a 4% coupon in 2038; a split 2042 maturity was priced as 4s to yield 3.93% and as 5s to yield 3.93%; and a 2047 maturity was priced as 4s to yield 3.98%.
The Series 2017B bonds were priced to yield from 1% with a 3% coupon in 2018 to 1.91% with a 2% coupon in 2022.
The deal is rated Aa3 by Moody's and AA-minus by S&P and Fitch.
Citigroup priced the University of Colorado Hospital Authority's $276.09 million of Series 2017C-1 and Series 2017C-2 revenue put bonds.
The Series 2017C-1 bonds were priced as 4s to yield 1.62% in 2047 with a mandatory put date of 2020. The Series 2017C-2 bonds were priced as 5s to yield 2.08% in 2038 with a mandatory put date of 2022.
The deal is rated Aa3 by Moody's and AA-minus by S&P and Fitch.
In the competitive arena on Tuesday, the University System of Maryland sold $115 million of Series 2017A tax-exempt auxiliary facility and tuition revenue bonds.
JPMorgan Securities won the deal with a true interest cost of 3.15%. Pricing information was not immediately available.
The system also competitively sold $52.26 million of Series 2017B tax-exempt auxiliary facility and tuition refunding revenue bonds. Citigroup won the deal with a TIC of 1.57%.
Both deals are rated Aa1 by Moody's and AA-plus by S&P and Fitch.
Since 2007, the system has issued about $1.67 billion of debt, with the largest issuance occurring in 2010 when it sold roughly $286 million of debt. The system did not come to market at all in 2013. With Tuesday's sales, it is only about $35 million away from equaling last year's total and has already beat the yearly issuances of 2015 and 2014.
Piper Jaffray is expected to price the North Clackamas School District No. 12, Ore.'s $323.64 million Series 2017 general obligation bonds and Series 2017A GOs on Tuesday.
The deal is rated Aa1 by Moody's and AA-minus by S&P.
Goldman Sachs is expected to price the District of Columbia Water and Sewer Authority's $300 million of Series 2017A public utility senior lien revenue green bonds and Series 2017B public utility senior lien revenue bonds on Tuesday. The deal is rated Aa1 by Moody's and triple-A by S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $483.9 million to $9.09 billion on Tuesday. The total is comprised of $1.92 billion of competitive sales and $7.17 billion of negotiated deals.
