Top quality municipal bonds ended weaker on Wednesday, traders said, while the first of the week's new issue deals hit the market.
Secondary Market
The yield on the 10-year benchmark muni general obligation rose three basis points to 1.70% from 1.67% on Tuesday, while the yield on the 30-year also increased by three basis points, to 2.53% from 2.50%, according to the final read of Municipal Market Data's triple-A scale.
U.S. Treasuries were little changed on Wednesday. The yield on the two-year Treasury rose to 0.87% from 0.86% on Tuesday, the 10-year Treasury yield gained to 1.77% from 1.76% and the yield on the 30-year Treasury bond was unchanged from 2.50%.
The 10-year muni to Treasury ratio was calculated at 95.7% on Wednesday compared to 94.9% on Tuesday, while the 30-year muni to Treasury ratio stood at 100.9% versus 100.0%, according to MMD.
The Municipal Securities Rulemaking Board reported 41,043 trades on Tuesday on volume of $8.48 billion.
Primary Market
JPMorgan Securities priced and repriced the Maricopa County Industrial Development Authority, Ariz.'s $804.15 million of Series 2016A revenue bonds for Banner Health.
The issue was repriced to yield from 1.10% with a 4% coupon in 2019 to 3.41% with a 4% coupon and 3.06% with a 5% coupon in a split 2038 maturity.
The deal is rated AA-minus by S&P Global Ratings and Fitch Ratings.
Bank of America Merrill Lynch priced and repriced the Charlotte-Mecklenburg Hospital Authority, N.C.'s $391.01 million of Series 2016A healthcare revenue refunding bonds for the Carolinas Healthcare System.
The issue was repriced to yield from 0.97% with a 4% coupon in 2018 to 3.25% with a 3% coupon in 2032 and to yield from 2.87% with a 5% coupon in 2034 to 3.64% with a 3.5% coupon in 2047.
The deal is rated Aa3 by Moody's Investors Service and AA-minus by S&P.
Since 2007, the authority has issued roughly $2.49 billion of bonds with the most issuance occurring in 2007 when it sold $1.1 billion of debt. The authority did not issue any bonds in 2010, 2014 or 2015. Wednesday's sale is the first one this year and brings the authority to the second highest issuance year since 2007.
In the competitive arena on Wednesday, the Campbell, Kenton and Boone Counties Sanitation District No. 1, Ky., sold $124.99 million of Series 2016 sanitation district revenue refunding bonds.
Bank of America Merrill Lynch won the issue with a true interest cost of 2.83%. The issue was priced to yield from 0.94% with a 5% coupon in 2017 to 3.28% with a 3.125% coupon in 2037. The deal is rated Aa3 by Moody's and AA by S&P.
On Thursday, Bank of America Merrill Lynch is slated to price the state of Illinois' $1.35 billion of Series of October 2016 general obligation refunding bonds.
The deal is rated Baa2 by Moody's, triple-B by S&P and BBB-plus by Fitch Ratings.
Also on Thursday, Citigroup is set to price the Great Lakes Water Authority, Mich.'s $1.32 billion deal consisting of $899 million of Series 2016 A, B, C & D water supply system senior lien and second lien revenue and revenue refunding bonds and $416 million of Series 2016 B & C sewage disposal system senior lien and second lien revenue refunding bonds.
Moody's rates the senior liens A3 and the second liens Baa1; S&P rates the senior liens A-minus and the second liens BBB-plus; and Fitch rates the senior liens A and the second liens A-minus.
Morgan Stanley is expected to price the California Department of Water Resources' $470.2 million of Series AW revenue bonds for the Central Valley water project on Thursday. The deal is rated Aa1 by Moody's.
Goldman Sachs is expected to price the Long Island Power Authority, N.Y.'s $407.78 million of Series 2016B electric system general revenue bonds on Thursday. The deal is rated A3 by Moody's and A-minus by S&P and Fitch.
Morgan Stanley is set to price Indianapolis' $223.53 million of Series 2016B water system first lien refunding revenue bonds on Thursday.
