Top-rated municipal bonds were slightly weaker in early activity, traders said, as the market moves into wary mode ahead of the Federal Reserve’s monetary policy announcement on Wednesday afternoon.
In the primary, the big Connecticut sale is set to be priced for institutions.
The Federal Open Market Committee is expected to leave its target for interest rates unchanged, but Fed observers will be parsing the language of its statement and analyzing it’s new “dot plot” for clues as to future rate moves.
The yield on the 10-year benchmark muni general obligation was as much as one basis point stronger from 1.90% on Tuesday, while the 30-year muni yield was as much as one basis point stronger from 2.84%, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were mixed on Wednesday. The yield on the two-year Treasury rose to 0.99% from 0.96% on Tuesday, while the 10-year Treasury yield gained to 1.98% from 1.96% and the 30-year Treasury bond yield was unchanged from 2.72%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 97.0% compared to 96.4% on Monday, while the 30-year muni to Treasury ratio stood at 104.4% versus 104.3%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 36,671 trades on Tuesday on volume of $10.94 billion.
Primary Market
Ramirez & Co. is set to price Connecticut’s $550 million of general obligation bonds for institutions on Wednesday after a one-day retail order period on Tuesday.
The issue was priced for retail to yield from 1.14% with 2%, 3% and 4% coupons in a triple split 2019 maturity to 3.46% with a 4% coupon in half of a split 2036 maturity. No retail orders were taken in the 2028, 2032-32, 2034-35 maturities or in second half of the 2036 split maturity. The 2017-18 maturities were offered as sealed bids.
The deal is rated Aa3 by Moody’s Investors Service and AA by S&P, Fitch and Kroll Bond Rating Agency.
Since 2006, Connecticut has sold about $28 billion of debt, with the largest issuances in 2008 and 2009 when it offered $4.2 billion and $3.8 billion, respectively. The Constitution State had low years of issuance in 2006 and 2007, when it came to market with $1.9 billion and $1.3 billion, respectively.
On Wednesday, 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. 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 $2.32 billion to $4.86 billion on Wednesday. The total is comprised of $1.71 billion of competitive sales and $3.15 billion of negotiated deals.
