Top-quality municipal bonds were weaker at mid-session, traders said, as more supply hit the market on Wednesday
Secondary Market
The 10-year benchmark muni general obligation yield was as much as two basis points higher from 2.32% on Tuesday, while the yield on the 30-year GO was from two to four basis points higher from 3.05%, according to al read of Municipal Market Data's triple-A scale.
U.S. Treasuries were weaker on Wednesday. The yield on the two-year Treasury rose to 1.24% from 1.19% on Tuesday, while the 10-year Treasury yield gained to 2.50% from 2.47%, and the yield on the 30-year Treasury bond increased to 3.09% from 3.05%.
On Tuesday, the 10-year muni to Treasury ratio was calculated at 94.0% on Tuesday compared to 96.6% on Monday, while the 30-year muni to Treasury ratio stood at 99.8%, versus 102.0%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 45,491 trades on Tuesday on volume of $9.30 billion.
Primary Market
On Wednesday, the Los Angeles County Metropolitan Transportation Authority, Calif., competitively sold $455.71 million of Series 2017A Proposition C sales tax revenue bonds.
Wells Fargo Securities won the bonds with a true interest cost of 3.52%. Pricing information was not immediately available.
The deal is rated Aa2 by Moody's Investors Service and AA-plus by S&P Global Ratings.
Since 2008, the L.A. MTA authority has issued about $5.05 billion of debt, with the largest issuance occurring in 2009 when it sold roughly $1.1 billion of debt. The authority saw a low year of issuance in 2015, when it sold $91.3 million.
In the negotiated sector on Wednesday, Jefferies priced the Texas Public Finance Authority's $375 million of Series 2017 taxable GO and refunding bonds.
The taxables were priced to yield from about 10 basis points above the comparable Treasury security in 2018 to about 100 basis points above the comparable Treasury security in 2036; a 2017 maturity was offered as a sealed bid.
The deal is rated triple-A by Moody's and S&P.
Barclays Capital priced the Medical Center Hospital Authority, Ga.'s $105.35 million of taxable revenue anticipation certificated for the Columbus Regional Healthcare System Inc. The issue was priced at par to yield 4.75% in 2022.
The deal is rated BBB-minus by S&P and BB-plus by Fitch Ratings.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $1.89 billion to $8.99 billion on Wednesday. The total is comprised of $1.77 billion of competitive sales and $7.21 billion of negotiated deals.
Siebert Sees Supply, Technicals Improving This Week
"The strong tone in the market that was present throughout January came to an abrupt and somewhat enigmatic end last week," according to a Siebert Cisneros Shank market comment on Tuesday. "Rich percentages of municipal yields versus U.S. Treasuries as well as numerous customer bid lists were the largest contributors of this trade-off, but market participants were still unsure of the full reasoning for the selloff. Municipals underperformed their U.S. Treasury counterparts up and down the yield curve."
SCS saw some more positive signs going forward.
"Supply this week [the week of Jan. 23] is very manageable and technical[s] will become more positive going forward due to bonds maturing and other redemptions," SCS wrote.
