Munis finish mostly weaker as new deals sell

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Municipal bonds were mostly weaker on Wednesday as new deals from issuers in Hawaii, Colorado, and Virginia came to market.

While sentiment on munis is firming, investors are approaching the early days of 2019 with caution.

"At the moment, there is nothing on the horizon to indicate that supply is poised for break-out growth, particularly given the loss of tax-exempt advance refunding capacity," said Jeffery Lipton, managing director and head of municipal research and strategy at Oppenheimer. "Although our investment thesis has generally kept to the intermediate part of the curve, we have routinely pointed out that shifting relative value can justify episodic moves further out on the curve. We think that now is an appropriate time to make such adjustments given the weaker demand for longer dated securities."

Primary market
Bank of America Merrill Lynch priced and repriced the city and county of Honolulu’s $250.2 million of Series 2019A and Series 2019B general obligation bonds.

The deal is rated Aa1 by Moody’s Investors Service and AA-plus by S&P Global Ratings.

Since 2009, the city and county have issued about $7.3 billion of bonds, with the most issuance occurring in 2015 when $1.6 billion was sold. The city and county didn’t come to market in 2013 or 2014.

Wells Fargo Securities priced the Pennsylvania Turnpike Commission’s $84.3 million of first series of 2019 turnpike revenue refunding bonds.

The deal is rated A1 by Moody’s, A-plus by Fitch and AA-minus by Kroll Bond Rating Agency. Proceeds will refinance a 2017 issue.

On Thursday, Citigroup is slated to price the New Jersey Turnpike Authority’s $226 million of Series 2019A turnpike revenue bonds. The deal is rated A2 by Moody’s, A-plus by S&P and A by Fitch.

Also Thursday, JPMorgan Securities is set to price the Connecticut Health and Educational Facilities Authority's $535.865 million of Series 2010A-4, Series S, U-1 and U-2 revenue bonds as a re-marketing for Yale University. The deal is rated triple-A by Moody's and S&P.

In the competitive arena on Wednesday, the Boulder Valley School District RE-2, Colo., sold around $301 million of GOs in two sales.

Citigroup won the $164.5 million of Series 2019B GO refunding bonds with a true interest cost of 2.9126%.

Wells Fargo won the $136.52 million of Series 2019A GOs with a TIC of 3.4677%.

The deals are rated Aa1 by Moody’s and AA-plus by S&P and Fitch.

Norfolk, Va., sold $138.21 million of GO capital improvement bonds.

BAML won the bonds with a TIC of 3.4925%.

The deal is rated Aa2 by Moody’s and AA-plus by S&P and Fitch.

Bond sales

Click here for the Honolulu repricing

Click here for the Honolulu pricing

Click here for the Boulder Valley $162.75M pricing

Click here for the Boulder Valley $136.52M pricing

Click here for the Norfolk pricing

Click here for the turnpike deal

Bond Buyer 30-day visible supply at $6.92B
The Bond Buyer's 30-day visible supply calendar decreased $688.3 million to $6.92 billion for Wednesday. The total is comprised of $3.06 billion of competitive sales and $3.86 billion of negotiated deals.

Secondary market
Municipal bonds were mostly weaker on Wednesday, according to a late read of the MBIS benchmark scale. Benchmark muni yields rose as much as two basis points in the one- to three-year and eight- to 30-year maturities and fell as much as one basis point in the four- to seven-year maturities.

High-grade munis were also mostly weaker, with muni yields rising as much as three basis points in the one- to three-year, eight- and nine-year and 21- to 30-year maturities, falling as much as a basis point in the four- to seven-year maturities and remaining unchanged in the 10-year and 20-year maturtities.

Municipals were weaker on Municipal Market Data’s AAA benchmark scale, which showed the yield on the 10-year muni general obligation and the yield on 30-year muni maturity rising by three basis points.

Treasury bonds were weaker as stock prices traded mixed.

On Wednesday, the 10-year muni-to-Treasury ratio was calculated at 81.4% while the 30-year muni-to-Treasury ratio stood at 101.3%, according to MMD. The muni-to-Treasury ratio compares the yield of tax-exempt municipal bonds with the yield of taxable U.S. Treasury with comparable maturities. If the muni/Treasury ratio is above 100%, munis are yielding more than Treasury; if it is below 100%, munis are yielding less.

Previous session's activity
The Municipal Securities Rulemaking Board reported 38,520 trades on Tuesday on volume of $8.91 billion.

California, New York and Texas were the municipalities with the most trades, with the he Golden State taking 14.865% of the market, the Empire State taking 12.615%, and the Lone Star State taking 9.169%.

Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Ziad Saba at 212-803-6079 for more information.

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Primary bond market Secondary bond market State of California State of New York State of Texas Honolulu City & County Pennsylvania Turnpike Commission New Jersey Turnpike Authority City of Norfolk, VA