Top shelf municipal bonds were steady to stronger at mid-session, traders said, as several large deals competitive deals were coming to market.
The Federal Open Market Committee will began its two-day monetary policy meeting in Washington, D.C., on Tuesday, and an announcement on interest rates is set to be released Wednesday afternoon.
Secondary Market
The yield on the 10-year benchmark muni general obligation was steady from 1.89% on Monday, while the 30-year muni yield was as much as two basis points weaker from 2.85%, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were narrowly mixed on Tuesday. The yield on the two-year Treasury rose to 0.97% from 0.96% on Monday, while the 10-year Treasury yield was flat at 1.96% and the 30-year Treasury bond yield was unchanged from 2.72%.
The 10-year muni to Treasury ratio was calculated on Monday at 96.4% compared to 95.7% on Friday, while the 30-year muni to Treasury ratio stood at 104.3% versus 104.1%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 32,032 trades on Monday on volume of $7.02 billion.
Primary Market
This week’s calendar consists of $5.78 billion of negotiated deals and $1.49 billion of competitive sales.
The state of Hawaii is offering two separate competitive sales on Tuesday totaling $525 million.
The Aloha State is starting off with an afternoon sale of $25 million of Series 2016 FC taxable general obligation bonds and follows it up with $500 million of Series 2016 FB tax-exempt GOs.
It is the first time in more than 25 years that Hawaii is selling a competitive bond issue. Both sales are rated Aa2 by Moody’s Investors Service and AA by Standard & Poor’s and Fitch Ratings.
Howard County, Md., sold three separate GO deals totaling a downsized $124.3 million on Tuesday.
Bank of America Merrill Lynch won the biggest part –$97.51 million of Series 2016A tax-exempt GO consolidated public improvement project and refunding bonds with a TIC of 3.47%. The issue was priced to yield from 0.50% with a 5% coupon in 2017 to approximately 3.102% with a 3% coupon in 2036.
Morgan Stanley won the $25.05 million tax-exempt sale with a TIC of 3.05% while Raymond James won the $1.76 million taxable deal with a TIC of 1.92%. All three issues are rated triple-A by Moody’s, S&P and Fitch.
Since 2006, the county has sold about $1.7 billion of bonds, with the largest issuances in 2007 and 2011 when it offered $248 million and $379 million, respectively. The county saw low years in 2006 and 2012, when it issued just $100 million and $57 million, respectively.
Bank of America Merrill Lynch is expected to price the Lancaster County, Pa., Hospital Authority’s $175 million of revenue and refunding bonds for the University of Pennsylvania Health System on Tuesday. The deal is rated Aa3 by Moody’s and AA by S&P.
On Wednesday, Ramirez & Co. is set to price Connecticut’s $550 million of general obligation bonds on Wednesday. The deal is rated Aa2 by Moody’s and AA by S&P, Fitch and Kroll Bond Rating Agency.
Robert W. Baird & Co. is expected to price Winston-Salem, N.C.’s $129.74 million of Series 2016A water and sewer system revenue refunding bonds and Series 2016B taxable water and sewer system revenue refunding bonds on Wednesday. The city sold a total of $67.93 million of GOs and taxable GOs in four competitive sales on Tuesday.
Meanwhile, the biggest deal of the week has a Thursday target date, according to officials, depending upon market conditions. JPMorgan Securities is expected to price the Nashville and Davidson County Health and Educational Facilities, Tenn.’s $780 million of revenue bonds for the Vanderbilt University Medical Center. The bonds are rated A3 by Moody’s.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar fell $3.47 billion to $7.18 billion on Tuesday. The total is comprised of $2.57 billion of competitive sales and $4.61 billion of negotiated deals.
