Top-rated municipal bonds were unchanged at mid-session, traders said, as the market saw new supply from Minnesota and Arizona issuers hit the screens one day after the $2.69 billion California deal priced.
Secondary Market
Bonds remained in quiet mode ahead of Friday's unemployment report for August and the long holiday weekend.
The yield on the 10-year benchmark muni general obligation on Wednesday was unchanged from 1.42% on Tuesday, while the yield on the 30-year was steady at 2.12%, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were mixed on Wednesday. The yield on the two-year Treasury fell to 0.79% from 0.80% on Tuesday, the 10-year Treasury yield was flat from 1.57% and the yield on the 30-year Treasury bond increased to 2.24% from 2.23%.
On Tuesday, the 10-year muni to Treasury ratio was calculated at 90.6% compared to 90.7% on Monday, while the 30-year muni to Treasury ratio stood at 94.9% versus 95.7%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 36,601 trades on Tuesday on volume of $10.83 billion.
Primary Market
In the competitive arena, the Florida Department of Environmental Protection sold $157.97 million of Florida Forever Series 2016A revenue refunding bonds. Wells Fargo Securities won the deal with a true interest cost of 1.59%.
The deal was priced to yield from 0.72% with a 5% coupon in 2018 to approximately 2.17% with a 2% coupon in 2028. The deal is rated Aa3 by Moody's Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.
Barclays Capital priced the Minneapolis-St. Paul Metropolitan Airports Commission's $484.33 million of senior airport revenue refunding and subordinate airport revenue refunding non-alternative minimum tax bonds.
The $331.55 million of Series 2016A non-AMT senior airport revenue refunding bonds were priced to yield from 1.56% with 3% and 5% coupons in a split 2025 maturity to 2.13% with a 5% coupon in 2032.
The $152.78 million of Series 2016B non-AMT subordinate airport revenue refunding bonds were priced to yield from 0.70% with 3% and 5% coupons in a split 2018 maturity to 1.54% with 3% and 5% coupons in a split 2024 maturity.
The senior bonds are rated AA-minus by S&P and Fitch, while the subordinate bonds are rated A-plus by S&P and Fitch.
Since 2008, the commission has sold about $1.4 billion of bonds, with the largest issuance occurring in 2014 when it sold about $264 million of securities. This week's sale will bring the commission to its highest sales level in a year since 2008. The commission did not issue any bonds in 2013 or 2015.
JPMorgan Securities priced the Arizona Transportation Board's $204.28 million of Series 2016 highway revenue refunding bonds.
The issue was priced as 5s to yield from 1.57% in 2026 to 2.22% in 2036; a 2017 maturity was offered as a sealed bid. The deal is rated Aa1 by Moody's and triple-A by S&P.
Late Tuesday, JPMorgan released the final pricing and said it received the verbal award on the state of California's $2.69 billion of various purpose general obligation and GO refunding bonds.
The $615 million of GOs were priced to yield from 0.50% with a 5% coupon in 2017 to 1.99% with a 5% coupon in a 2030; a triple split 2046 maturity was priced as 3s to yield 3.05%, as 4s to yield 2.58% and as 5s to yield 2.28%.
The $2.08 billion of GO refunding bonds were priced to yield from 0.45% and 0.50% with 5% coupons in a split 2017 maturity to 2.55% with a 4% coupon and 2.25% with a 5% coupon in a split 2037 maturity.
The issue is rated Aa3 by Moody's and AA-minus by S&P and Fitch.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $2.74 billion to $9.95 billion on Wednesday. The total is comprised of $3.42 billion of competitive sales and $6.53 billion of negotiated deals.
Moody's Raises Calif. DWR's $4.6B Revs to Aa1
Moody's Investors Service said it upgraded the California Department of Water Resources' $4.61 billion of pre-sale parity rated power supply revenue bonds outstanding to Aa1 from Aa2; the outlook is stable.
At the same time, Moody's assigned an Aa1 rating to the DWR's $567.86 million of Series 2016P taxable power supply revenue bonds, expected to come to market next week.
Moody's said the upgrade reflects the removal of all material power operating risks leaving only limited administrative operations including general reporting, filing the annual rate case with the California Public Utilities Commission, and settling a couple of outstanding litigation cases that are expected to result in refunds to DWR and passed through to customers.
