Top-quality municipal bonds were mixed at mid-session, according to traders as large deals from California, Texas and Louisiana came to market on Tuesday.
Secondary Market
The yield on the 10-year benchmark muni general obligation was as much as one basis point weaker from 1.60% on Monday, while the 30-year muni yield was steady from 2.54%, according to a read of the Municipal Market Data's triple-A scale.
U.S. Treasuries were slightly weaker. The yield on the two-year Treasury increased to 0.76% from 0.74% on Monday, while the 10-year Treasury yield rose to 1.78% from 1.77% and the yield on the 30-year Treasury bond gained to 2.60% from 2.59%.
The 10-year muni to Treasury ratio was calculated at 90.4% on Monday compared with 92.0% on Friday, while the 30-year muni to Treasury ratio stood at 98.3% versus 99.2%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 32,700 trades on Monday on volume of $6.66 billion.
Primary Market
The state of California sold three separate competitive offerings totaling about $1.5 billion.
JPMorgan Securities won the $645.3 million of the Golden State’s Bid Group B tax-exempt various purpose unlimited tax general obligation bonds with a true interest cost of 1.53%. The $176 million of GO construction bonds were priced to yield from 1.09% with a 5% coupon in 2021 to 1.68% with a 4% coupon in 2025 while the $469.3 million of GO refunding bonds were priced to yield from 0.61% with a 5% coupon in 2017 to 1.79% with a 5% coupon in 2026.
Bank of America Merrill Lynch won the $606.7 million of the Bid Group C tax-exempt various purpose GO bonds with a TIC of 2.83%. The $56 million of GO construction bonds were priced as 5s to yield 1.99% in 2028 and at par to yield 3% in 2035 while the $550.5 million of GO refunding bonds were priced to yield from 1.91% with a 5% coupon in 2027 to 3.04% with a 3% coupon in 2036.
Wells Fargo Securities won the $236.8 million of the Bid Group A taxable various purpose GOs with a TIC of 1.33%. The issue was priced as 1.50s to yield 0.60% in 2017, as 0.90s to yield 0.80% in 2018 and at par to yield 1.50% in 2021.
All three sales are rated Aa3 by Moody’s Investors Service, AA-minus by Standard & Poor’s and A-plus by Fitch Ratings.
Also in the competitive arena, Fort Lauderdale, Fla., sold $165.94 million of Series 2016 water and sewer revenue and revenue refunding bonds.
Raymond James won the deal with a TIC of 2.71%. Pricing information was not immediately available. The deal is rated Aa1 by Moody’s and AA-plus by S&P.
In the negotiated sector, BAML priced the Texas Transportation Commission’s $615 million of Series 2016 state highway improvement GOs.
The issue was priced as 5s to yield from 0.69% in 2018 to 2.60% in 2041, 2.63% in 2043, and 2.66% in 2046; a 2017 maturity was offered as a sealed bid.
The deal is rated triple-A by Moody’s, S&P and Fitch and is the largest deal so far this year in the Lone Star State.
Proceeds will go toward capital projects, particularly those designed to relieve congestion in major urban areas.
Since 2006, the commission has sold about $28 billion of bonds with the most issuance occurring in 2014 when it sold $5.5 billion. The TTC did not come to market in 2011 or 2013.
JPMorgan priced the state of Louisiana’s $283.94 million of Series 2016B GO refunding bonds for retail investors ahead of the institutional pricing on Wednesday.
The issue was priced for retail to yield from 1.56% with 3% and 5% coupons in a split 2022 maturity to 2.43% with a 5% coupon in 2029. The deal is rated AA by S&P and AA-minus by Fitch.
JPMorgan also priced the San Diego Unified School District, Calif.’s $126.92 million of Series R-5 GO dedicated unlimited ad valorem property tax refunding bonds. The issue was priced as 5s to yield 1.56% in 2025, as 5s to yield 1.69% in 2026 and as 5s to yield 1.99% and as 4s to yield 2.19% in a split 2029 maturity.
The bonds are rated Aa2 by Moody’s, triple-A by Fitch and AA-plus by Kroll Bond Rating Agency.
RBC Capital Markets priced the New Jersey Educational Facilities Authority’s $118.59 million of Series 2016B revenue refunding bonds for Montclair State University. The issue was priced to yield from 0.96% with a 3% coupon in 2019 to 3.14% with a 3% coupon in 2038. The deal is rated A1 by Moody’s and AA-minus by S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $1.67 billion to $12.83 billion on Tuesday. The total is comprised of $5.85 billion of competitive sales and $6.98 billion of negotiated deals.
