Top-rated municipal bonds were weaker at midday, according to traders, as the first big wave of supply hit the screens on Tuesday, just part of the over $11 billion in new issues slated for sale this week.
Primary Market
The New York City Transitional Finance Authority is scheduled to hit the market with a total of $1.05 billion in negotiated and competitive offerings this week.
On Tuesday, Ramirez & Co. held a second day for retail orders on the TFA's $800 million of tax-exempt Fiscal 2017 Series B Subseries B-1 future secured subordinate bonds. The deal will be priced for institutions on Wednesday.
Ramirez priced the issue for retail to yield from 0.84% with 4% and 5% coupons in a spilt 2019 maturity to 3% at par in 2042. No retail orders were taken in the 2030-2034 or 2036-2039 maturities. A 2018 maturity was offered as a sealed bid.
The deal is expected to be rated Aa1 by Moody's Investors Service and rated triple-A by S&P Global Ratings and Fitch Ratings.
The TFA will also offer two competitive sales of taxable bonds on Wednesday, consisting of $62.5 million of Fiscal 2017 Series B Subseries B-3 future secured subordinate bonds and $187.51 million of Fiscal 2017 Series B Subseries B-2 future secured subordinate bonds.
On Tuesday, Siebert Cisneros Shank priced Connecticut's $965.19 million of special tax obligation bonds and special tax obligation refunding bonds for transportation infrastructure purposes.
The $800 million of Series 2016A special tax obligation bonds were priced to yield from 0.99% with a 5% coupon in 2019 to 2.61% with a 5% coupon and 2.85% with a 4% coupon in a split 2036 maturity. The 2017 and 2018 maturities were offered as sealed bids.
The $165.19 million of Series 2016B special tax obligation refunding bonds were priced to yield from 0.99% with 2% and 5% coupons in a split 2019 maturity to 2.19% with a 5% coupon in 2028.
The deal is rated Aa3 by Moody's, AA by S&P and AA-minus by Fitch.
Goldman Sachs priced the Michigan Finance Authority's $850.49 million of Series 2016 hospital revenue refunding bonds for the Henry Ford Health System.
The issue was priced to yield from 1.01% with a 5% coupon in 2017 to 2.93% with a 5% coupon in 2037; a 2041 maturity was priced as 5s to yield 2.98%, a 2042 maturity was priced as 3 1/4s to yield 3.50% and a 2046 term bond was priced as 4s to yield 3.43%. The deal is rated A3 by Moody's and A by S&P.
Goldman is also set to price the California Department of Water Resources' $567.86 million of taxable power supply revenue bonds on Tuesday. The deal is rated Aa1 by Moody's, AA by S&P and AA-plus by Fitch.
Since 2008, the DWR has sold about $12.78 billion of debt, with the largest issuance occurring in 2010 when it sold about $4.9 billion. DWR also sold more than $1 billion in 2008 and 2011. The lowest year of issuance came in 2013, when it sold $166 million.
In the competitive arena on Tuesday, Paulding County, Ga., sold $150.43 million of Series 2016 water and sewerage revenue improvement and refunding bonds. Bank of America Merrill Lynch won the bonds with a true interest cost of 2.86%.
The issue was priced to yield from 0.87% with a 5% coupon in 2019 to 2.88% with a 3% coupon in 2037; the 2043 and 2048 maturities were priced at par to yield 3% and the 2050 maturity was priced as 3s to yield 3.05%. The deal is rated Aa3 by Moody's and AA by S&P.
The Louisville/Jefferson County Metro Government, Ky., sold $154.4 million of bonds in two separate offerings.
Citigroup won the $91.25 million of Series 2016 general obligation bonds for the City Center project with a TIC of 2.91%. The issue was priced to yield from 0.89% with a 5% coupon in 2019 to 2.98% with a 3% coupon in 2039; the 2041 maturity was priced at par to yield 3%, the 2045 maturity was priced as 3s to yield 3.03% and the 2047 maturity was priced as 3s to yield 3.05%.
JPMorgan Securities won the $63.15 million of Series 2016A GOs with a TIC of 1.81%. Pricing information was not immediately available.
Both deals are rated Aa1 by Moody's, AA-plus by S&P and AAA by Fitch.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $1.12 billion to $19.27 billion on Tuesday. The total is comprised of $4.13 billion of competitive sales and $15.13 billion of negotiated deals.
"The Bond Buyer's 30-day visible supply rose to $19.3 billion, the highest level in seven years," Alan Schankel, managing director, municipal strategy at Janney, wrote in a Tuesday market comment. "Fortunately, demand remains strong, evidenced by the record persistence (49 straight weeks) and strength ($48 billion year to date) of inflows to municipal mutual funds."
Secondary Market
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 rose by as much as two basis points from 2.23%, 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 0.79% from 0.77% on Monday, the 10-year Treasury yield rose to 1.71% from 1.66% and the yield on the 30-year Treasury bond increased to 2.44% from 2.39%.
On Monday, the 10-year muni to Treasury ratio was calculated at 91.1% compared to 89.2% on Friday, while the 30-year muni to Treasury ratio stood at 93.1% versus 92.0%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 30,688 trades on Monday on volume of $9.29 billion.
