Top-shelf municipal bonds finished were steady on Tuesday, traders said, with yields on all maturities remaining unchanged.
After the long holiday weekend, the primary kicked into gear with deals from the Massachusetts Development Finance Agency, Florida Department of Transportation, and the Indiana Finance Authority.
Primary Market
In the competitive arena on Tuesday, the Florida DOT sold $173.39 million of Series 2016A turnpike revenue refunding bonds.
Bank of America Merrill Lynch won the issue with a true interest cost of 2.87%. The deal was priced as 5s to yield from 0.63% in 2017 to 2.12% in 2026, and from 2.77% with a 4% coupon in 2030 to 3.31% with a 3.25% coupon in 2036.
The bonds were rated Aa3 by Moody's Investors Service and AA-minus by Fitch Ratings.
Previous to this sale, the last time the DOT competitively sold comparable bonds was on Oct. 5, 2015, when Bank of America Merrill Lynch won $195.88 million of Series 2015B turnpike revenue refunding bonds with a TIC of 3.15%.
In the negotiated sector on Tuesday, JPMorgan Securities priced the Massachusetts DFA's $424.35 million of Series 2016Q revenue bonds for the Partners HealthCare System.
The issue was priced to yield from 0.89% with a 3% coupon in 2018 to 3.36% with a 4% coupon in 2036. A split 2041 maturity was priced as 4 to yield 3.54% and as 5s to yield 3.14%; a split 2047 maturity was priced as 4s to yield 3.60% and as 5s to yield 3.20%. A 2017 maturity was offered as a sealed bid. The bonds are rated Aa3 by Moody's, AA-minus by S&P and AA by Fitch.
Also on Tuesday, JPMorgan priced the Indiana F.A.'s $163.40 million of Series 2016A hospital revenue refunding bonds for the Indiana University Health Obligated Group. The bonds were priced as 5s to yield from 0.78% in 2017 to 2.16% in 2025. The deal is rated Aa3 by Moody's, AA-minus by S&P and AA by Fitch.
The largest deals of the week are coming on Wednesday from Washington state, which will put up for bid two competitive sales totaling $673 million.
The Evergreen State will sell $529.36 million of Series R-2016B various purpose general obligation refunding bonds and $143.65 million of Series R-2016C motor vehicle tax GO refunding bonds. Both series are rated Aa1 by Moody's and AA-plus by Standard & Poor's and Fitch.
Also in the competitive arena, the University of Kentucky will offer sales totaling $158.116 million on Wednesday. The issues consist of $109.26 million of Series 2016A general receipts bonds and $48.85 million of Series 2016B taxable general receipts bonds. Both series are rated Aa2 by Moody's and AA by S&P.
Additionally on Wednesday, the Rosemount-Apple Valley Independent School District No. 196, Minn., will sell $121.30 million Series 2016A GO school building bonds under the Minnesota School District enhancement program. The issue is rated Aa1 by Moody's and AA-plus by S&P.
On Thursday, the Board of Regents for the University of Houston will offer two deals totaling $285 million. The BOR will sell $101.15 million of Series 2016A tax-exempt consolidated revenue and refunding bonds and $183 million of Series 2016B taxable consolidated revenue and refunding bonds. The bonds are rated Aa2 by Moody's and AA by S&P.
Loop Capital Markets is expected to price the District of Columbia Water and Sewer Authority's $372.25 million of public utility subordinate lien revenue refunding bonds on Wednesday. The issue is rated Aa3 by Moody's, AA by S&P and AA-minus by Fitch.
Stifel is slated to price Gwinnet County School District, Ga.'s $330 million of GO sales tax bonds on Thursday. The issue is rated triple-A by Moody's and S&P.
Citigroup is scheduled to price the New York Triborough Bridge & Tunnel Authority $300 million of MTA bridges and tunnels general revenue bonds on Thursday after a one-day retail order period on Wednesday. The transaction is rated Aa3 by Moody's and AA-minus by both S&P and Fitch.
Wells Fargo Securities is expected to price the Aldine Independent School District, Texas' $265.46 million of unlimited tax school building and refunding bonds on Wednesday. The issue is backed by the Permanent School Fund guarantee program and has underlying ratings of Aa1 from Moody's and AA from S&P.
Secondary Market
The yield on the 10-year benchmark muni general obligation was steady from 1.75% on Friday, while the 30-year muni yield was as much as one basis point stronger from 2.70%, according to the final read of Municipal Market Data's triple-A scale.
Treasuries were mixed on Tuesday. The yield on the two-year Treasury rose to 0.85% from 0.84% on Friday, while the 10-year Treasury yield was flat from 2.02% and the 30-year Treasury bond yield decreased to 2.79% from 2.80%.
The 10-year muni to Treasury ratio was calculated on Monday at 85.8% compared to 86.4% on Friday, while the 30-year muni to Treasury ratio stood at 96.1% versus 96.2%, according to MMD.
One of the more active securities trading on Tuesday was the Illinois general obligation bonds that sold last week, according to the Municipal Securities Rulemaking Board.
The Illinois Series of January 2016 GO 4s of 2038 were trading at a high price of 102.265, a low yield of 3.725%, in 84 trades totaling $5.77 million, the MSRB's EMMA website reported. This was up from Friday when the 4s were trading at a high price of 102.247, a low yield of 3.727%, in 224 trades totaling $40.01 million. The bonds were priced last Thursday as 4s at 98.56 to yield 4.10%. The maturity was insured by AGM and rated A2 by Moody's and AA by S&P.
Last Week's Most Active Sectors
Revenue bonds comprised 54.43% of new issuance in the week ended Jan. 15, down from 56.02% in the previous week, according to
Some of the most actively traded issues by type were in Illinois, South Carolina and Michigan.
In the GO bond sector, the Chicago 5s of 2038 traded 70 times. In the revenue bond sector, the South Carolina Public Service Authority 3.75s of 2048 traded 64 times. And in the taxable bond sector, the Anchor Bay School District 2.12s of 2020 traded 13 times, Markit said.
Treasury to Review Market for 1st Time in Nearly 20 Years
For the first time in almost 20 years, the U.S. Treasury Department is undertaking a comprehensive review of the government securities market.
Treasury said on Tuesday it wants public comments on the evolving structure of the Treasury market. Treasury is asking participants and stakeholders for their views on changes in market structure, the implication for market functioning, and on risk management policies and practices.
"The Treasury market remains the deepest, most liquid market in the world, a source of safety and liquidity, and a haven in times of turbulence" Antonio Weiss, Counselor to the Treasury Secretary, said in a press release. "The
The RFI is the most comprehensive review of the Treasury market since the 1998 Joint Study of the Regulatory System for Government Securities.
