The last of the week’s big new issues are set to come to market on Thursday, with the institutional pricing of the Hawaii deal leading the pack.
Secondary Market
U.S. Treasuries were stronger on Thursday. The yield on the two-year Treasury slipped to 0.75%, from 0.76% on Wednesday, while the 10-year Treasury yield dipped to 1.82% from 1.83% and the 30-year Treasury bond yield dropped to 2.62% from 2.66%.
Municipal bonds finished stronger on Wednesday .The yield on the 10-year benchmark muni general obligation fell three basis points to 1.75%, from 1.78% on Tuesday, while the 30-year muni yield dipped one basis point to 2.72% from 2.73%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated on Wednesday at 95.7% compared with 98.2% on Tuesday, while the 30-year muni to Treasury ratio stood at 102.5% versus 104.7%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 41,892 trades on Wednesday on volume of $19.55 billion.
Primary Market
Bank of America Merrill Lynch is set to price the state of Hawaii's $306.75 million of general obligation refunding bonds for institutions after a one-day retail order period.
For retail, the $5.3 million of tax-exempt Series FD bonds were offered as a sealed bid maturing in 2016. The $182.005 million of tax-exempt Series FE bonds were priced to yield from 1.05% with a 5% coupon in 2019 to 2.23% with a 4% coupon in a split 2028 maturity, with the other half not available to retail investors.
The $119.45 million of taxable Series FF bonds were priced for retail to yield from about 35 basis points over the comparable Treasury security in 2020 to approximately 125 basis points over the comparable Treasury security in 2028.
The bonds are rated Aa2 by Moody’s Investors Service and AA by Standard & Poor’s and Fitch Ratings.
BAML is also expected to price the Pennsylvania Higher Educational Facilities Authority’s $160 million of Series 2016 bonds for the University of Pennsylvania. The deal is rated Aa1 by Moody’s and AA-plus by S&P.
Since 2006, the Pennsylvania HEFA has sold about $7.8 billion of bonds. The most issuance occurred in 2015 when the authority sold $1.40 billion of debt and it sold least amount in 2013 when it offered about $213 million of bonds.
In the competitive arena, the Long Beach Unified School District, Calif., is selling $145.25 million of Series 2016 general obligation refunding bonds. The deal is rated Aa2 by Moody’s and AA-minus by S&P.
The district last competitively sold comparable bonds on Feb. 3, 2015, when Citigroup won $180 million of Election of 2008 Series D GOs with a true interest cost of 3.59%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar fell $2.17 billion to $6.07 billion on Thursday. The total is comprised of $1.92 billion of competitive sales and $4.15 billion of negotiated deals.
