Prices of top-rated municipal bonds closed flat to slightly firmer on Wednesday, traders said, with yields steady to as much as three basis points lower.
In the primary, the tax-exempt bond market saw the first of the week's big offerings being sold, with new deals from North Carolina, Texas and Florida issuers coming to market.
Secondary Market
The yield on the 10-year benchmark muni general obligation finished at 2.22% unchanged from Tuesday, while the yield on the 30-year GO fell one basis point to 3.20% from 3.21%, according to the final read of Municipal Market Data's triple-A scale. Yields on some shorter-dated maturities were steady to as much as three basis points lower.
Treasury prices rose again as the plunge in Chinese stocks amid worries over Greece kept momentum in the flight to quality bid.
The yield on the two-year Treasury note dropped to 0.55% from 0.57% on Tuesday, while the 10-year yield declined to 2,20% from 2.22% and the 30-year yield decreased to 2.99% from 3.00%.
The 10-year muni to Treasury ratio was calculated on Wednesday at 100.6% versus 100.5% on Tuesday, while the 30-year muni to Treasury ratio stood at 107.2% compared to 106.6%, according to MMD.
Primary Market
In the negotiated sector, the largest deal of the week came to market as Morgan Stanley priced the North Carolina Municipal Power Agency No. 1's $455.89 million of Series 2015 A and B refunding bonds, Series 2015 C bonds and Series 2015E forward delivery refunding bonds. The issue is rated A by Standard and Poor's and Fitch Ratings.
The $305.47 million of Series 2015A bonds were priced as 5s to yield from 2.35% in 2023 to 3.11% in 2028; a 2031 maturity was priced as 5s to yield 3.36%. A split 2032 maturity was priced for $30 million as a step coupon at par to yield 2% and priced for $17.95 million as 5s to yield 3.41%.
The $42.61 million of Series 2015B bonds were priced to yield from 2.17% with a 5% coupon in 2022 to 2.55% with a 4% coupon in 2024. The $90.18 million of Series 2015C bonds were priced to yield from 3.23% with a 5% coupon in 2029 to 3.63% with a 3.50% coupon and 3.36% with a 5% coupon in a split 2031 maturity. The $17.64 million of Series 2015E bonds were priced as 5s to yield 2.35% in 2022 and 2.56% in 2023.
Since 1995, the North Carolina MPA No. 1 has issued more than $3.61 billion dollars of debt. The years of 2003 and 2012 saw the most issuance with $923 million and $605 million, respectively. The agency did not come to market at all in the 1996, 2000-2002, 2004, 2006-2007, 2011 or 2013-2014.
JPMorgan priced Austin, Texas' $244 million of Series 2015A water and wastewater system revenue refunding bonds.
The bonds were priced to yield from 0.57% with a 2% coupon in 2016 to yield 3.39% with a 5% coupon in 2036. The issue was rated Aa2 by Moody's, AA by S&P and AA-minus by Fitch.
RBC Capital Markets priced the Desert Sands Unified School District, Calif.'s $159.12 million of Series 2015 Election of 2014 general obligation bonds and Series 2015 GO refunding bonds.
The $75 million of Election of 2014 GOs were priced to yield from 0.36% with a 2% coupon in 2016 to 3.47% with a 5% coupon in 2038; a 2042 term bond was priced as 5s to yield 3.58% and a 2044 term was priced as 4s to yield approximately 4.104%. The $84.12 million of Series 2015 refunding GOs were priced to yield 0.20% with a 2% coupon in 2015 and from 1.21% with a 4% coupon in 2019 to 3.12% with a 4% coupon in 2028. The issue was rated Aa2 by Moody's and AA-minus by S&P.
Citigroup priced the Massachusetts Port Authority's $173.15 million of Series 2015A non-AMT and Series 2015B AMT revenue bonds.
The non-AMT series 2015-A bonds for $105.54 million were priced as 5s to yield from 1.14% in 2019 to 3.31% in 2035. Term bonds in 2040 and 2045 were priced as 5s to yield 3.46% and 3.66%. The series 2015-B AMT series bonds for $67.61 million were priced as 5s to yield from 1.39% in 2019 to 3.64% in 2035.Term bonds in 2040 and 2045 were priced as 5s to yield 3.76% and 3.86%. The deal was rated Aa2 by Moody's and AA by S&P and Fitch.
Citi also priced the State of New York Mortgage Agency's $151.07 million of homeowner mortgage revenue bonds consisting of Series 192 non-AMT, Series 193 non-AMT and Series 194 AMT bonds. The $45.41 million of Series 192 non-AMTs were priced at par to yield 3.80% in 2031 and 4% in 2035. The $20.64 million of Series 193 non-AMTs were priced at par to yield 0.40% and 0.55% in a split 2016 maturity, 0.70% and 0.90% in a split 2017 maturity; 1.10% and 1,15% in a split 2018 maturity and 4.10% in 2040. The 85.02 million of Series 194 AMTs were priced at par to yield from 1.35% in 2018 to 3.55% and 3.60% in a split 2026 maturity; a 2028 maturity was priced at par to yield 3.80% and a 2035 maturity was prices as 3 1/2s to yield about 2.15%. The issue is rated Aa1 by Moody's
In the competitive sector, the Central Florida Expressway Authority sold $193.70 million of Series 2015 senior lien revenue bond anticipation notes. Wells Fargo Securities won the notes with a true interest cost of 1.59%. The BANs were priced as 1 5/8s to yield 1.50% in 2019. The BANs were rated A2 by Moody's and A by S&P and Fitch.
The Clark County Water District, Nev., sold $103.63 million of Series 2015 limited tax GO water reclamation refunding bonds, which are additionally secured by pledged revenues. Barclays Capital won the bonds with a TIC of 3.42%. The bonds were priced to yield from 1.21% with a 5% coupon in 2019 to 3.77% with a 4% coupon in 2038. The issue was rated Aa1 by Moody's and triple-A by S&P.
The Metropolitan Council of Minnesota sold three separate issues of general obligation bonds totaling $151 million. Bank of America Merrill Lynch won the $100 million of Series 2015C GO wastewater revenue bonds with a TIC of 2.84%. The bonds were priced to yield from 0.26% with a 5% coupon to 3.41% with a 3.75% coupon in 2035. Citi won the $45 million of Series 2015A GO transit bonds with a TIC of 1.69%. The bonds were priced to yield from 0.24% with a 5% coupon in 2016 to 2.25% with a 5% coupon in 2025. Piper Jaffray won the $6 million of Series 2015B GO park bonds with a TIC of 1.07%. Pricing information was not available.
On Thursday, the Illinois State Toll Highway Authority's $400 million of Series 2015A toll highway senior revenue bonds are expected to be priced by Bank of America Merrill Lynch. Earlier, the bonds were erroneously reported as selling on Wednesday. The bonds are rated Aa3 by Moody's and AA-minus by S&P and Fitch.
This deal is the first of two new-money borrowings to finance a record year of capital spending. The $1.6 billion of capital spending planned this year is part of the 15-year, $12 billion Move Illinois capital program launched in 2011. The authority operates 286 miles of toll highways in 12 counties in northern Illinois.
