Top quality municipal bonds were weaker at mid-session, traders said, as the first big deals of the week came to market, led by offerings from the Massachusetts School Building Authority and the California State Public Works Board.
The yield on the 10-year benchmark muni general obligation rose by as much as two basis points from 1.52% on Monday, while the yield on the 30-year was two to four basis points higher from 2.31%, according to a read of Municipal Market Data's triple-A scale.
Treasuries were also weaker on Tuesday. The yield on the two-year Treasury rose to 0.82% from 0.79% on Monday, the 10-year Treasury yield gained to 1.66% from 1.62% and the yield on the 30-year Treasury bond increased to 2.38% from 2.33%.
On Monday, the 10-year muni to Treasury ratio was calculated at 93.7% on Monday compared to 94.6% on Friday, while the 30-year muni to Treasury ratio stood at 98.9% versus 99.4%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 26,968 trades on Monday on volume of $12.88 billion.
Primary Market
Tuesday's action got underway when Barclays Capital priced the Massachusetts School Building Authority's $604.3 million of Series 2016B senior dedicated sales tax bonds and Series 2016C senior dedicated sales tax refunding bonds for retail investors ahead of the institutional offering later today.
The $405 million of Series 2016B were priced for retail to yield from 0.91% with a 2% coupon in 2018 to 3.06% with a 3% coupon and 2.44% with a 5% coupon in a split 2036 maturity; a 2041 maturity was priced as 5s to yield 2.54% and a split 2046 maturity was priced as 4s to yield 2.91% and as 5s to yield 2.61%. A 2017 maturity was offered as a sealed bid. No retail orders were taken in the 2030-2031 or 2033-2035 maturities.
The $199.3 million of Series 2016C bonds were priced as 5s to yield 2.35% in 2034 and as 4s to yield 2.72% in 2035; the 2033 maturity was not offered to retail investors.
The deal is rated Aa2 by Moody's Investors Service and AA-plus by S&P Global Ratings and Fitch Ratings.
Loop Capital Markets priced the California State Public Works Board's $527.54 million of Series 2016 C&D various projects lease revenue refunding bonds for retail investors ahead of the institutional pricing on Wednesday.
The $313.2 million of Series 2016C bonds were priced as 5s to yield from 1.09% in 2020 to 2.49% in 2034. The $214.34 million of Series 2016D bonds were priced to yield from 0.86% with a 3% coupon in 2017 to 2.74% with a 4% coupon and at par with a 3% coupon in a split 2034 maturity.
Loop replaced Wells Fargo Securities as lead manager on the deal, which was originally slated to be priced last week.
The bonds are rated A1 by Moody's and A-plus by S&P and Fitch; the issue carries stable outlooks from all three agencies.
JPMorgan Securities is expected to price the Arizona Board of Regents Series 2016A system revenue and revenue refunding bonds and Series 2016B system revenue green bonds for the University of Arizona on Tuesday. The deal is rated Aa2 by Moody's and AA-minus by S&P.
Bank of America Merrill Lynch is expected to price the Massachusetts Development Finance Agency's $195 million of Series 2016 BB-1, BB-2 and BB-3 revenue bonds for Boston University in Tuesday. The deal is rated A1 by Moody's and A-plus by S&P.
BAML is also set to price the Georgia Housing and Finance Authority's $117 million of Series 2016B-1 non-AMT and Series 2016B-2 single-family mortgage bonds for retail on Tuesday ahead of the institutional pricing on Wednesday. The deal is rated triple-A by S&P.
Ziegler is expected to price the Kalamazoo Hospital Finance Authority, Mich.'s $112.38 million of Series 2016 hospital revenue refunding bonds for the Bronson Healthcare Group on Tuesday. The deal is rated A2 by Moody's
Citigroup is set to price the West Basin Municipal Water District, Calif.'s $112 million of Series 2016A refunding revenue bonds on Tuesday. The deal is rated Aa2 by Moody's and AA-minus by S&P.
On Wednesday, the biggest deal of the week will be coming from the Massachusetts Development Finance Agency.
Goldman Sachs is set to price the DFA's $1.54 billion of Series 2016A revenue bonds for Harvard University. The deal is rated triple-A by Moody's and S&P.
Since 2006, the DFA has sold almost $16.5 billion of bonds, with the most issuance prior to this year occurring in 2001 when it sold $1.99 billion of bonds. The agency sold the least amount of debt in 2009 when it issued $616.7 million.
In the competitive arena on Wednesday, Wisconsin is selling about $325 million of Series 2016D general obligation bonds. The last time the state competitively sold comparable bonds was on July 12 when Morgan Stanley won $83.98 million of Series 2016B GOs with a true interest cost of 0.99%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $1.64 billion to $21.54 billion on Tuesday. The total is comprised of $3.81 billion of competitive sales and $17.74 billion of negotiated deals.
