Municipal bond traders geared up to see more supply Wednesday, as the Massachusetts Water Resources Authority deal was priced for retail investors.
Primary Market
Citigroup priced the MWRA's $514.62 million of general revenue bonds for retail investors ahead of the institutional pricing on Thursday.
The $66.05 million of Series 2016B general revenue bonds were priced for retail as 3s to yield 0.69% in 2018, 0.80% in 2019, 0.93% in 2020 and from 1.39% with a 4% coupon in 2023 to 2.47% with a 5% coupon in 2036; a 2040 term bond was priced as 5s to yield 2.63%. A 2017 maturity was offered as a sealed bid.
The $448.57 million of Series 2016C general revenue refunding green bonds were priced for retail to yield from 1.25% with a 4% coupon in 2022 to 1.77% with a 4% coupon in 2026, as 5s to yield 2.18% in 2031, as 4s to yield 2.77% in 2036 and as 4s to yield 2.93% in a split half of a 2040 maturity. There were no retail order taken in the 2021, 2027-2030, 2032-2035 maturities or in half of the 2040 split maturity. A 2017 maturity was offered as a sealed bid.
The deal is rated Aa1 by Moody's Investors Service and AA-plus by Standard and Poor's and Fitch Ratings. All three rating agencies have a stable outlook on the credit.
Since 2006, the MWRA has issued nearly $5 billion of debt, with the most issuance occurring in 2008 when $1.16 billion of bonds were sold. The authority did not come to market at all in 2015 and only sold $171 million in 2013.
Raymond James priced the Board of Regents of the University of Texas System’s $133.47 million of Series 2016C revenue financing system refunding bonds on Wednesday.
The issue was priced to yield from 0.73% with a 4% coupon in 2018 to 1.81% with a 5% coupon in 2026. A 2017 maturity was offered as a sealed bid. The deal is rated triple-A by Moody’s, S&P and Fitch.
Goldman Sachs is expected to price the Orange County Health Facilities Authority, Fla.’s $257 million of Series 2016A hospital revenue refunding bonds for the Orlando Health Obligated Group. The deal is rated A2 by Moody’s and A by S&P and Fitch.
Cabrera Capital Markets is expected to price Harris County, Texas, Metropolitan Transit Authority’s $125 million of Series A sales and use tax refunding bonds and Series B sales and use tax refunding contractual obligation bonds. The deal is rated Aa2 by Moody’s and AA-plus by S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar fell $1.568 billion to $11.36 billion on Wednesday. The total is comprised of $4.04 billion of competitive sales and $7.33 billion of negotiated deals.
Secondary Market
U.S. Treasuries were narrowly mixed on Wednesday. The yield on the two-year Treasury inched up to 0.74% from 0.73% on Tuesday, while the 10-year Treasury yield slipped to 1.77% from 1.78% and the yield on the 30-year Treasury bond dipped to 2.59% from 2.60%.
Prices of top-rated municipal bonds finished weaker on Tuesday. The yield on the 10-year benchmark muni general obligation rose two basis points to 1.62% from 1.60% on Monday, while the 30-year muni yield increased two basis points to 2.57% from 2.55%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated at 91.0% on Tuesday compared with 92.9% on Monday, while the 30-year muni to Treasury ratio stood at 98.6% versus 99.6%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 39,667 trades on Tuesday on volume of $9.95 billion.
