Top-rated municipal bonds were stronger at mid-session, according to traders, as the market prepared for the Federal Reserve's announcement on interest rates this afternoon.
The Federal Open Market Committee is widely expected to hike its fed funds target rate by 25 basis points to between 0.50% and 0.75%. The announcement will be made at 2 p.m.
Secondary Trading
The yield on the 10-year benchmark muni general obligation was as much as two basis points lower from 2.37% on Tuesday, while the yield on the 30-year fell two to four basis points from 3.18%, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were stronger on Wednesday. The yield on the two-year Treasury declined to 1.16% from 1.17% on Tuesday, the 10-year Treasury dropped to 2.43% from 2.48%, while the yield on the 30-year Treasury bond decreased to 3.09% from 3.15%.
On Tuesday, the 10-year muni to Treasury ratio was calculated at 95.6% compared to 95.3% on Monday while the 30-year muni to Treasury ratio stood at 101.1% versus 100.3%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 56,100 trades on Tuesday on volume of $12.07 billion.
Primary Market
The new issue market will be pretty quiet on Wednesday.
In the competitive arena on Wednesday, the Douglas County School District, Omaha Public, Neb., sold $141 million of Series 2016 general obligation bonds.
Bank of America Merrill Lynch won the bonds with a true interest cost of 3.51%.
The issue was priced to yield from 2.40% with a 5% coupon in 2025 to 3.62% with a 4% coupon in 2040.
The deal is rated Aa1 by Moody's Investors Service and AAA by S&P Global Ratings.
Since 2009, the school district has sold about $538.9 million of debt, with the most issuance prior to this year occurring in 2015 when it also sold $141 million of bonds. The district did not come to market in 2011 or 2013.
Also this week, Barclays Capital is expected to price the Chicago Board of Education's $500 million of dedicated capital improvement tax bonds.
There is no exact date for the sale, with the timing on the deal dependent on market conditions.
The bonds are rated A by Fitch Ratings and BBB by Kroll Bond Rating Agency.
Ziegler is expected to price the Tarrant County Cultural Education Facilities Finance Corp., Texas' $130 million of Series 2016 A&B retirement facilities revenue bonds.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $1.54 billion to $7.70 billion on Wednesday. The total is comprised of $1.53 billion of competitive sales and $6.18 billion of negotiated deals.
