Top-rated municipal bonds were stronger at mid-session, according to traders, as yields on most maturities weakened from two to four basis points.
In the primary, traders were seeing some of the week's biggest deals come to market.
Secondary Market
The yield on the 10-year benchmark muni general obligation was two to four basis points weaker from 1.75% on Tuesday, while the 30-year muni yield two to four basis points weaker from 2.70%, according to a read of Municipal Market Data's triple-A scale.
Treasuries were higher on Wednesday. The yield on the two-year Treasury fell to 0.81% from 0.85% on Tuesday, while the 10-year Treasury yield dropped to 1.97% from 2.02% and the 30-year Treasury bond yield decreased to 2.73% from 2.79%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 85.8% compared to 86.4% on Friday, while the 30-year muni to Treasury ratio stood at 96.1% versus 96.2%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 34,098 trades on Tuesday on volume of $5.08 billion.
Primary Market
The largest deals of the week came from Washington state which offered two competitive sales totaling $673 million.
JPMorgan Securities won the $529.36 million of Series R-2016B various purpose general obligation refunding bonds with a true interest cost of 2.69%. The issue was priced as 2s to yield 0.30% in 2016 and priced as 5s to yield from 0.94% in 2019 to 2.52% in 2033.
JPMorgan also won the $143.65 million of Series R-2016C motor vehicle tax GO refunding bonds with a TIC of 2.84%. Pricing information was not immediately available. Both series were rated Aa1 by Moody's Investors Service and AA-plus by Standard & Poor's and Fitch Ratings.
Since 2006, Washington state has sold about $27.61 billion of bonds, with the most issuance occurring in 2009 and 2010 when it issued $3.32 billion and $3.39 billion, respectively. The Evergreen state is no stranger to the muni market, as it has issued bonds roughly 13 times a year since 2006.
In the negotiated sector, Citigroup priced the New York Triborough Bridge & Tunnel Authority $480.29 million of Series 2016A MTA bridges and tunnels general revenue bonds for retail investors ahead of the institutional pricing on Thursday.
The issue was priced to yield from 0.70% with 3% and 4% coupons in a split 2017 maturity to 2.48% with a 5% coupon in 2031 and from 2.59% with a 5% coupon in 2033 to 2.74% with a 5% coupon in 2036; a 2041 maturity was priced as 5s to yield 2.92% and a 2046 maturity was priced as 5s to yield 2.98%. A 2016 maturity was offered as a sealed bid.
The bonds were rated Aa3 by Moody's and AA-minus by both S&P and Fitch and AA by Kroll Bond Rating Agency.
Loop Capital Markets priced the District of Columbia Water and Sewer Authority's $385.61 million of Series 2016A public utility subordinate lien revenue refunding bonds.
The issue was priced to yield 1.04% with 2% and 5% coupons in a split 2019 maturity and from 2.36% with a 5% coupon in 2029 to 2.94% with a 5% coupon in 2039. The issue was rated Aa3 by Moody's, AA by S&P and AA-minus by Fitch.
Back in the competitive arena, the University of Kentucky sold two issues totaling $158.11 million.
Hutchinson, Shockey won the $109.26 million of Series 2016A general receipts bonds with a TIC of 3.60%. Pricing information was not immediately available. JPMorgan won the $48.85 million of Series 2016B taxable general receipts bonds with a TIC of 2.86%. Pricing information was not immediately available. Both series were rated Aa2 by Moody's and AA by S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $2.6 million to $9.55 billion on Wednesday. The total is comprised of $4.12 billion competitive sales and $5.43 billion of negotiated deals.
Ramirez: Muni Bond Market Contracted in '15
The U.S. municipal bond market shrank last year, according to a market comment released on Wednesday by Ramirez & Co.
"Despite starting 2015 off strong, calls and redemptions outpaced the $420.8 billion in new issuance for the total muni market, leading to a $4.3 billion net decline through yearend 2015," the report said. "This brings the total market size to $3.50 trillion."
Ramirez said the market expansion seen in the spring of '15 was offset by declines experienced in the summer and winter.
"This trend is expected to continue over the next 30 days into 2016, in which the total muni market is set to contract by $6.99 billion," according to Ramirez. "Of the 10 states with the most outstanding debt, Texas stands to shrink the most (1.0%), followed by Ohio (0.8%), New Jersey (0.7%), Pennsylvania (0.3%), and California (0.3%). Conversely, Florida is set to expand the most (1.2%), followed by Washington (1.1%), and Illinois (0.3%)."
