Top-rated municipal bonds ended mixed on Wednesday, traders said, after the Federal Open Market Committee kept rates unchanged and lowered its federal funds rate projection for year-end to 0.9% from 1.4%. The lowered forecast means it expects to raise rates only two times this year, not the four indicated by the last set of "dot plots."
The Summary of Economic Projections also lowered the projection for GDP this year to 2.2% from a 2.4% expectation in December. The panel described expansion as "moderate" and held the target range for the federal funds rate at 0.25% to 0.50.
Federal Reserve Bank of Kansas City President Esther George opposed the decision, according to the statement, preferring "to raise the target range for the federal funds rate to 1/2 to 3/4 percent."
In the primary market, the big Connecticut deal was priced for institutions while the Nashville and Davidson County sale was priced for retail investors.
Secondary Trading
The yield on the 10-year benchmark muni general obligation dropped two basis points to 1.88% from 1.90% on Tuesday, while the 30-year muni yield was steady at 2.84%, according to the final read of Municipal Market Data's triple-A scale. Yields on short maturities were steady to as much as three basis points higher.
U.S. Treasuries were narrowly mixed on Wednesday. The yield on the two-year Treasury fell to 0.89% from 0.96% on Tuesday, while the 10-year Treasury yield declined to 1.94% from 1.96% and the 30-year Treasury bond yield rose to 2.74% from 2.72%.
The 10-year muni to Treasury ratio was calculated on Wednesday at 97.1% compared to 97.0% on Tuesday, while the 30-year muni to Treasury ratio stood at 103.9% versus 104.4%, according to MMD.
Primary Market
Ramirez & Co. priced and repriced Connecticut's $550 million of general obligation bonds for institutions on Wednesday after a one-day retail order period.
The issue was repriced for institutions to yield from 0.60% with a 3% coupon in 2017 to 3.50% with a 4% coupon in 2036.
On Tuesday, the issue was priced for retail to yield from 1.14% with 2%, 3% and 4% coupons in a triple split 2019 maturity to 3.46% with a 4% coupon in half of a split 2036 maturity. No retail orders were taken in the 2028, 2032-32, 2034-35 maturities or in second half of the 2036 split maturity. The 2017-18 maturities were offered as sealed bids.
The deal is rated Aa3 by Moody's Investors Service and AA by S&P, Fitch and Kroll Bond Rating Agency. Moody's, S&P and Kroll have a negative outlook on the state while Fitch maintains a stable outlook.
Since 2006, Connecticut has sold about $28 billion of debt, with the largest issuances in 2008 and 2009 when it offered $4.2 billion and $3.8 billion, respectively. The Constitution State had low years of issuance in 2006 and 2007, when it came to market with $1.9 billion and $1.3 billion, respectively.
Robert W. Baird & Co. priced Winston-Salem, N.C.'s $135.47 million of Series 2016A water and sewer system revenue refunding bonds and Series 2016B taxable water and sewer system revenue refunding bonds.
The $124.14 million of Series 2016A bonds were priced to yield from 0.72% with a 3% coupon in 2018 to 3.21% with a 3.125% coupon in 2039. The $11.33 million of Series 2016B bonds were priced at par to yield from 0.63% in 2016 to 1.35% in 2019. The deal was rated Aa1 by Moody's, triple-A by S&P and AA-plus by Fitch.
On Tuesday, the city sold a total of $67.93 million of GOs and taxable GOs in four competitive sales.
Morgan Stanley priced the California Health Facilities Financing Authority's $176.98 million of Series 2016A refunding revenue bonds and Series 2016B revenue bonds for the Lucile Packard Children's Hospital at Stanford.
The $76.98 million of Series 2016A bonds were priced as 3s to yield from 0.60% in 2016 to 2.732% in 2033. The $100 million of Series 2016B bonds were priced as 5s to yield 3.34% in a 2055 bullet maturity. The deal is rated Aa3 by Moody's, AA-minus by S&P and AA by Fitch.
JPMorgan Securities priced for retail the Nashville and Davidson County Health and Educational Facilities, Tenn.'s $483.995million of Series 2016A revenue bonds for the Vanderbilt University Medical Center.
The deal was priced for retail as 5s to yield 3.14% in 2029 and 3.21% in 2030. No retail orders were taken in the 2031, 2035, 2040 or 2046 maturities. The bonds are rated A3 by Moody's.
