Top-shelf municipal bonds were weaker at midday, according to traders, as the first of the week's larger new deals started to roll in, topped by a big sale from the Port Authority of New York and New Jersey.
Secondary Market
The yield on the 10-year benchmark muni general obligation rose by as much as two basis points from 1.73% on Monday, while the yield on the 30-year gained as much as one basis point from 2.56%, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were weaker. The yield on the two-year rose to 0.86% from 0.85% from Monday, the 10-year Treasury yield gained to 1.86% from 1.83% and the yield on the 30-year Treasury bond increased to 2.61% from 2.58%.
On Monday, the 10-year muni to Treasury ratio was calculated at 85.9% compared to 94.1% on Friday, while the 30-year muni to Treasury ratio stood at 88.9% versus 98.1%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 33,215 trades on Monday on volume of $9.66 billion.
Primary Market
Citigroup priced the Port Authority of New York and New Jersey's $587.75 million of consolidated bonds for institutions after holding a one-day retail order period on Monday.
Citi priced the $237.75 million of alternative minimum tax 197th Series bonds to yield from 1.05% with a 5% coupon in 2018 to 1.59% with a 5% coupon in 2021 and from 2.88% with a 5% coupon in 2032 to 3.06% with a 5% coupon in 2036. A 2041 maturity was priced as 5s to yield 3.16% while a 2017 maturity was offered as a sealed bid.
The $350 million of non-AMT 198th Series bonds were priced as 5s to yield 2.07% in 2027, 2.20% in 2028 and 2.39% in 2030 and from 2.64% in 2033 to 2.76% in 2036, 2.86% in 2041, and 2.91% in 2046. A 2056 maturity was priced as 5 1/4s to yield 3.06%.
The deal is rated Aa3 by Moody's Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.
Since 2006, the Port Authority has sold roughly $23.8 billion of securities, with the most issuance occurring in 2012 when it sold $3.69 billion. The authority has sold over $1 billion in every year since 2006 and has sold more than $2 billion five times during that span. Tuesday's sale will put the authority over the $1 billion mark for the year.
Goldman Sachs priced the Dormitory Authority of the State of New York's $317.75 million of Series 2016A tax-exempt revenue bonds for the New School.
The issue was priced to yield from 1.57% with a 5% coupon in 2021 to 3.25% with a 5% coupon in 2037. A 2041 maturity was priced as 5s to yield 3.31%, a 2043 maturity was priced as 4s to yield 3.73%, a 2046 maturity was priced as 5s to yield 3.36% and a 2050 maturity was priced as 5s to yield 3.46%.
The DASNY deal is rated A3 by Moody's and A-minus by S&P.
Bank of America Merrill Lynch is expected to price Chicago's $1.06 billion of O'Hare International Airport's general senior lien revenue refunding bonds. The deal is rated A by S&P and Fitch.
There are three large competitive deals on the docket for Tuesday.
The Bellevue School District No. 405, Wash., sold $239.17 million of Series 2016 unlimited tax general obligation and refunding bonds. Citi won the bonds with a true interest cost of 2.32%.
The issue was priced to yield from 0.75% with a 5% coupon in 2017 to 3.11% with a 3% coupon in 2035. The deal, backed by the Washington State School District Credit Enhancement Program, is rated Aa1 by Moody's and AA-plus by S&P.
The state of Ohio sold $150 million of Series 2016B infrastructure improvement GO bonds.
BAML won the bonds with a true interest cost of 2.99%. Pricing information was not immediately available. The deal is rated Aa1 by Moody's and AA-plus by S&P and Fitch.
The North Kansas City School District No. 74, Mo., sold $114 million of Series 2016B limited tax GO school improvement bonds under the Missouri Direct Deposit Program.
Raymond James won the bonds with a true interest cost of 2.72%. Pricing information was not immediately available. The deal is rated Aa1 by Moody's and AA-plus by S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $176 million to $13.17 billion on Tuesday. The total is comprised of $2.99 billion of competitive sales and $10.18 billion of negotiated deals.
