Munis wary ahead of Fed decision

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Municipal bond buyers were taking a cautious approach as the Federal Reserve meets on Wednesday to decide monetary policy.

The Federal Open Market Committee is set to announce its decision on interest rates this afternoon. While the Fed is expected to leave its fed funds rate target unchanged, observers will pay close attention to any discussion of balance-sheet reduction for hints of flexibility.

Primary market
On Wednesday, Goldman Sachs priced the Orange County Health Facilities Authority’s $145.53 million of Series 2019B forward delivery hospital revenue refunding bonds for the Orlando Health Obligated Group.

The deal is rated A2 by Moody’s Investors Service and A-plus by S&P Global Ratings.

Citigroup priced the El Paso Independent School District, Texas’ $240.9 million of Series 2019 unlimited tax school building bonds.

The bonds, which are Permanent School Fund Guarantee Program insured, are rated triple-A by Moody’s and Fitch Ratings.

Wells Fargo Securities received the written award on American Municipal Power, Inc.’s $168.455 million of refunding Series 2019A project revenue bonds for the Prairie State Energy Campus.

The deal is rated A1 by Moody’s Investors and A by S&P and Fitch.

JPMorgan Securities received the official award on the California Pollution Control Financing Authority’s $183.155 million of Series 2019 water furnishing revenue refunding bonds for the San Diego County Water Authority Desalination Project Pipeline.

The deal is rated Baa3 by Moody’s and BBB-minus by Fitch.

RBC Capital Markets received the written award on the Douglas County School District, Number RE1, Colo.’s $249.975 million of Series 2019 general obligation bonds.

The deal, which is Colorado State Intercept Program insured, is rated Aa1 by Moody’s and AA-plus by Fitch.

On Thursday, the New York Metropolitan Transportation Authority will sell over $1 billion of securities in four competitive sales.

The offerings consist of $200 million of Series 2019A Subseries 2019A-1 transportation revenue climate bond certified green bonds; $162.805 million of Series 2019A Subseries 2019A-2 transportation revenue climate bond certified green bonds; and $100 million of Series 2019A Subseries 2019A-3 transportation revenue climate bond certified green bonds.

The MTA will also sell $750 million of transportation revenue bond anticipation notes.

Moody's rates the bonds A1 and assigns a MIG1 rating to the BANs, S&P rates the bonds A and the BANs SP1, Fitch rates the bonds AA-minus and the BANs F1-plus and Kroll Bond Rating Agency assigns an AA-plus rating to the bonds and a K1-plus rating to the BANs.

Bond sales

Florida
Click here for the Orlando Health pricing

Texas
Click here for the El Paso pricing

Illinois
Click here for the American Municipal Power deal

California
Click here for the Pollution Control deal

Colorado
Click here for the Douglas County deal

Bond Buyer 30-day visible supply at $6.78B
The Bond Buyer's 30-day visible supply calendar decreased $780.5 million to $6.78 billion for Wednesday. The total is comprised of $2.27 billion of competitive sales and $4.51 billion of negotiated deals.

Secondary market
Municipal bonds were stronger Wednesday, according to a late read of the MBIS benchmark scale. Benchmark muni yields fell as much as one basis point in the one- to 30-year maturities.

High-grade munis were also stronger, with muni yields falling as much as one basis point across the curve.

Municipals were mixed on Municipal Market Data’s AAA benchmark scale, which showed the yield on the 10-year muni general obligation remaining unchanged while the yield on 30-year muni maturity fell as much as one basis point.

Treasury bonds were weaker as stock prices traded higher.

On Tuesday, the 10-year muni-to-Treasury ratio was calculated at 81.9% while the 30-year muni-to-Treasury ratio stood at 101.5%, according to MMD. The muni-to-Treasury ratio compares the yield of tax-exempt municipal bonds with the yield of taxable U.S. Treasury with comparable maturities. If the muni/Treasury ratio is above 100%, munis are yielding more than Treasury; if it is below 100%, munis are yielding less.

Previous session's activity
The Municipal Securities Rulemaking Board reported 41,841 trades on Tuesday on volume of $13.67 billion.

California, New York and Texas were the municipalities with the most trades, with the Golden State taking 13.613% of the market, the Empire State taking 13.387% and the Lone Star State taking 10.216%.

Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Ziad Saba at 212-803-6079 for more information.

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