Top-shelf municipal bonds finished unchanged on Wednesday, traders said, after the Federal Open Market Committee in a widely expected move left its fed funds target rate unchanged at between 0.25% and 0.50%.
Secondary Market
The yield on the 10-year benchmark muni general obligation was steady from 1.57% on Tuesday, while the yield on the 30-year was flat from 2.33%, according to the final read of Municipal Market Data's triple-A scale.
Treasuries were mixed on Wednesday. The yield on the two-year Treasury rose to 0.79% from 0.77% on Tuesday, the 10-year Treasury yield declined to 1.68% from 1.69% and the yield on the 30-year Treasury bond decreased to 2.41% from 2.43%.
The 10-year muni to Treasury ratio was calculated at 94.2% on Wednesday compared to 93.0% on Tuesday, while the 30-year muni to Treasury ratio stood at 93.5% versus 95.8%, according to MMD.
Primary Market
The primary market was mostly quiet on Wednesday, with underwriters and issuers wrapping up Monday and Tuesday's business ahead of the FOMC decision. Action gets underway again on Thursday as several large deals are scheduled to come to market.
On Wednesday, Bank of America Merrill Lynch received the official award on the Texas Water Development Board's $600.07 million Series 2016 State Water Implementation Revenue for Texas master trust revenue bonds. The SWIRFT bonds are rated triple-A by S&P Global Ratings and Fitch Ratings.
Barclays Capital received the written award on the Georgia Private Colleges and Universities Authority's $351.74 million of Series 2016 A&B revenue bonds for Emory University.
The $130.03 million of Series 2016A bonds were repriced as 4s to yield 2.92% and as 5s to yield 2.61% in a split 2046 maturity. The $221.71 million of Series 2016B bonds were repriced to yield from 0.77% with a 2% coupon in 2017 to 2.82% with a 4% coupon and 2.52% with a 5% coupon in a split 2038 maturity; a 2043 maturity was priced as 3s to yield 3.13%.
The deal is rated Aa2 by Moody's Investors Service, AA by S&P Global Ratings and AA-plus by Fitch Ratings.
RBC Capital Markets received the official award on the Pennsylvania Economic Development Financing Authority's $239.39 million of Series 2016 revenue bonds for the University of Pittsburgh Medical Center.
The UPMC bonds were priced to yield from 0.91% with a 4% coupon in 2018 to 3.10% with a 4% coupon and 3.23% with a 3.125% coupon in a split 2036 maturity; a 2041 maturity was priced as 4s to yield 3.17%. The deal is rated Aa3 by Moody's, A-plus by S&P and AA-minus by Fitch.
Cabrera Capital Markets received the written award on the Centinela Valley Union High School District in Los Angeles County, Calif.'s $139.5 million of general obligation refunding bonds.
The $87.26 million of Series 2016B 2022 Crossover bonds were priced to yield from 2.68% with a 2.5% coupon in 2030 to 3.12% with a 3% coupon in 2036; a 2038 maturity was priced as 3s to yield 3.15%, a 2041 maturity was priced as 3s to yield 3.19%, a 2044 maturity was priced as 3s to yield 3.21%, a 2047 maturity was priced as 4s to yield 2.98% and a 2050 maturity was priced as 4s to yield 3.08%.
The $52.35 million of Series 2016C bonds were priced to yield from 0.80% with a 4% coupon in 2017 to 2.74% with a 4% coupon in 2034; a 2036 maturity was priced as 3s to yield 3.12%.
Assured Guaranty Municipal insured $136.89 million of the deal. The Series B bonds were insured by AGM and rated AA by S&P; the Series C 2017-2021 were uninsured and rated AA-minus by S&P while the 2022-2024 and 2036 maturities were insured by AGM and rated AA by S&P.
Action is set to heat up again on Thursday, as several big deals are on tap in both the competitive and negotiated sectors.
In the competitive arena on Thursday, the Dormitory Authority of the State of New York will sell over $1 billion of bonds in three separate offerings.
The offerings consist of $409.16 million Series 2016A Group A state sales tax revenue bonds; $396.83 million of Series 2016A Group C state sales tax revenue bonds; and $310.94 million of Series 2016A Group B state sales tax revenue bonds.
The sales are rated triple-A by S&P.
Since 2006, DASNY has sold over $9 billion of competitive offerings. DASNY saw the most issuance was in 2015 when it put $2.11 billion of bonds out for the bid. The authority did not competitively sell bonds in 2008 or 2009.
Goldman Sachs plans to price the Pennsylvania Turnpike Commission's $649.89 million of subordinate revenue refunding bonds on Thursday.
The offering is expected to consist of $391.52 million of Subseries A bonds, $82.17 million of Subseries B taxables and $176.2 million of motor license fund enhanced bonds. The two subseries are rated A3 by Moody's and A-minus by Fitch, while the enhanced motor license series is rated A2 by Moody's and A-minus by Fitch.
Also on Thursday, Bank of America Merrill Lynch is set to price the Central Florida Expressway's $425 million of Series 2016B senior lien refunding revenue bonds. The issue is rated A2 by Moody's and A by S&P and Fitch.
Citigroup is expected to price the Turlock Irrigation District, Calif.'s $160 million of Series 2016 first priority subordinated revenue refunding bonds on Thursday. The deal is rated A-plus by Fitch.
RBC Capital Markets is expected to price the Indiana Finance Authority's $284.97 million of Series 2016D state revolving fund program green bonds and Series 2016E state revolving fund program refunding green bonds on Thursday. The deal is rated triple-A by Moody's, S&P and Fitch.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 33,645 trades on Tuesday on volume of $12.65c billion.
