Top shelf municipal bonds were steady to weaker at mid-session, according to traders, as several big deals from Alaska, New Jersey and Ohio issuers came to market.
Primary Market
The primary market was mostly focused on the competitive arena on Wednesday.
The New Jersey Educational Facilities Authority competitively sold two issues totaling $217.22 million for Princeton University.
Goldman Sachs won the $117.22 million of Series 2016B revenue refunding bonds with a true interest cost of 1.77%. The issue was priced as 5s to yield from 0.51% in 2017 to 2.01% in 2027.
Citigroup won the $100 million of Series 2016A revenue bonds with a TIC of 2.53%. Pricing information was not immediately available.
Both sales are rated triple-A by Moody’s Investors Service and Standard & Poor’s.
Alaska competitively sold $134.79 million of Series 2016A general obligation bonds in its first GO deal since Moody’s cut the state’s rating one notch two weeks ago.
Bank of America Merrill Lynch won the deal with a TIC of 3.02%. The bonds were priced to yield from 0.39% with a 5% coupon in 2016 to 2.86% with a 5% coupon in 2035.
The deal is rated Aa1 by Moody’s, AA-plus by S&P and AAA by Fitch Ratings.
Since 2006, Alaska has issued bonds an average of 2.3 times a year, selling about $1.8 billion, with the largest issuances in 2006 and 2010 when it offered $413 million and $371 million, respectively. The lows came in 2007 and 2008, when the 49th state of the U.S. did not issue any bonds.
In the negotiated sector, Ramirez & Co. priced the Ohio Water Development Authority’s $167.94 million of Fresh Water Series 2016A water development revenue bonds on Wednesday.
The bonds were priced as 5s to yield from 2.25% and 2.28% in a split 2028 maturity to 3.04% with a 4% coupon in 2036. The deal is rated triple-A by Moody’s and S&P.
CUSIP: Muni Bond ID Requests Up 25% vs. Jan.
Total CUSIP requests for new municipal identifiers rose 25% in February to 1,137 from 910 in January, CUSIP Global Services reported on Wednesday. The January number was a 12% drop from December.
On a year-over-year basis, however, municipal bond identifier requests were down by 9% in February.
The report tracks requests by issuers for bond identifiers as an early indicator of new volume and suggests a resurgence of municipal issuance in the next several weeks.
“In our last CUSIP Issuance Trends report, we suggested that the mix of activity we were seeing to start the year was indicative of volatility….” said Gerard Faulkner, director of operations for CUSIP Global Services. “Accordingly, the numbers for February have swung in the complete opposite direction. With the interest rate situation still touchy in the U.S. and incredibly uncertain in Europe, we expect that volatility to continue through the first half of the year.”
Regionally, municipal bond issuers in Texas demanded the highest volume of new CUSIP identifiers in February, accounting for 139 requests during the month.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar fell $2.14 billion to $10.08 billion on Wednesday. The total is comprised of $2.80 billion of competitive sales and $7.28 billion of negotiated deals.
Secondary Market
The yield on the 10-year benchmark muni general obligation was steady from 1.88% on Tuesday, while the 30-year muni yield was as much as one basis point strong from 2.86%, according to a read of Municipal Market Data's triple-A scale.
Treasuries were lower at midday. The yield on the two-year Treasury was up to 0.89% from 0.87% on Tuesday, while the 10-year Treasury yield rose to 1.88% from 1.83% and the 30-year Treasury bond yield increased to 2.68% from 2.63%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 102.6% compared to 100.0% on Monday, while the 30-year muni to Treasury ratio stood at 108.5% versus 107.4%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 37,984 trades on Tuesday on volume of $8.05 billion.
