Municipals were stronger at mid-session, according to traders, with yields on some top-quality maturities weakening by as much as six basis points.
U.S. Treasuries surged as stocks fell on worries about the economic situation in China and the military one in North Korea.
Secondary Market
The yield on the 10-year benchmark muni general obligation was four to six basis points weaker from 1.85% on Tuesday, while the 30-year muni yield was four to six basis points weaker from 2.77%, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were higher as equities fell on geopolitical concerns.
North Korea carried out a successful test of a nuclear weapon, while in China weak economic data caused stocks to fall, which prompted the government to weaken the currency.
The yield on the two-year Treasury declined to 1.00% from 1.02% on Tuesday, while the 10-year Treasury yield dropped to 2.19% from 2.24% and the 30-year Treasury bond yield decreased to 2.94% from 3.00%.
At mid-session, the Dow Jones Industrial Average was off about 190 points while the Nasdaq Composite Index lost around 30 points and the S&P 500 Index fell nearly 20 points.
The 10-year muni to Treasury ratio was calculated on Tuesday at 82.4% compared with 83.5% on Monday, while the 30-year muni to Treasury ratio stood at 92.1% versus 92.8%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 42,729 trades on Tuesday on volume of $9.01 billion.
Primary Market
In the primary, issuers in Massachusetts and Colorado came to market with the week's biggest competitive sales.
In the competitive arena, the Massachusetts School Building Authority sold $150 million of Series 2016A senior dedicated sales tax bonds.
Wells Fargo Securities won the bonds with a true interest cost of 3.46%. Pricing information was not immediately available.
The deal is rated Aa2 by Moody's Investors Service and AA-plus by Standard & Poor's and Fitch Ratings.
On the short-term slate, Colorado competitively sold $339 million of Series 2015B education loan program tax and revenue anticipation notes, which are due June 29.
Multiple groups won sections of the TRANS, but details were not immediately available.
Also on Wednesday, Wells Fargo Securities is expected to price the New Jersey Healthcare Facilities Authority's $200 million of bonds for the Princeton Healthcare System. The issue is rated Baa2 by Moody's and triple-B by Fitch.
Meanwhile, the Board of Regents of the University of Texas system is coming to market this week with two negotiated deals totaling $450 million.
Bank of America Merrill Lynch on Tuesday priced the Board's $200 million of Series 2016B revenue financing system green bonds for retail investors. The issue was structured with step coupons that increase over the life of the deal; it was priced for retail at par to yield 2.50% in 2036 and 2046.
BAML is also set to price the Board's $250 million of Series 2016A taxable revenue financing system bonds. Both series are rated triple-A by Moody's, S&P and Fitch.
On Thursday, BAML is expected to price the South Carolina Public Service Authority's $382 million of revenue obligation Series 2016A tax-exempt refunding bonds.
Since 2006, Santee Cooper has sold about $9.8 billion of debt. The most issuance occurred in 2013 and 2015 when it offered $1.85 billion and $1.40 billion of bonds, respectively. It offered the least amount of debt in 2007 and 2010 when it sold $440.5 million and $591.1 million, respectively.
BAML is also slated to price the city of Tallahassee, Fla.'s $150 million of Series 2016A project healthcare facilities revenue bonds for Tallahassee Memorial Healthcare Inc. The issue is rated Baa1 by Moody's.
Stifel is set to price Orange County, Calif.'s $334.31 million of taxable Series 2016A pension obligation bonds on Thursday. The issue is rated AA by S&P and Fitch.
And JPMorgan Securities is set to price on Thursday the KU Central Development Corp.'s $333.18 million of Series 2016 lease revenue bonds, which are being issued through the Wisconsin Public Finance Authority. The issue is rated Aa2 by Moody's.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $810.7 million to $9.50 billion on Wednesday. The total is comprised of $4.57 billion competitive sales and $4.93 billion of negotiated deals.
