The municipal bond market's $5.42 billion new issue slate has been kicked-started Tuesday by the competitive sale from a Virginia issuer and a negotiated deal out of a New York City suburb.
The Federal Open Market Committee began its two-day meeting, as scheduled at noon on Tuesday, culminating with an announcement on Wednesday that's expected to see rates unchanged.
Primary Market
On Tuesday, Fairfax County, Va., sold $344.84 million of Series 2016A public improvement and refunding bonds. Morgan Stanley won the bidding with a true interest cost of 2.45%. The bonds were priced to yield from 0.30% with a 5% coupon in 2016 to 2.46% with a 5% coupon in 2035. The deal is rated triple-A by Moody's Investors Service, Standard & Poor's and Fitch Ratings.
The county last competitively sold comparable bonds on Feb. 18, 2015, when Citigroup won $227.34 million of Series 2015A public improvement bonds with a true interest cost of 2.68%.
Ramirez & Co. priced Nassau County, N.Y.'s $273 million of Series 2016A GO general improvement bonds on Tuesday. The bonds were priced to yield from 0.55% with a 2.5% coupon in 2017 to 3.21% with a 5% coupon in 2039. The deal is rated A2 by Moody's, A-plus by S&P and A by Fitch.
Goldman Sachs priced the Nebraska Public Power District's $139.7 million of general revenue bonds. The $70.88 million of series A bonds were priced to yield 0.99% with a 5% coupon in 2019, from 2.04% with a 5% coupon in 2025 to 2.50% with a 5% coupon in 2029, and from 2.67% with a 5% coupon in 2031 to 3.37% with a 3.25% coupon in 2036. A term bond in 2041 was priced as 5s to yield 3.17%.
The $68.82 million of series B bonds were priced as 5s to yield 0.99% in 2019, from 2.50% with a 5% coupon in 2029 to 2.74% with a 5% coupon in 2032, 2.84% with a 5% coupon in 2034 and from 2.94% with a 5% coupon in 2036 to 2.99% with a 5% coupon in 2037. A term bond in 2040 was priced as 5s to yield 3.14%. The deal is rated A1 by Moody's and A-plus by both S&P and Fitch.
The largest deal of the week comes on Wednesday from the Chicago Board of Education. JPMorgan Securities is scheduled to price the $875 million of unlimited tax general obligation bonds with dedicated revenues.
The issue is slated to consist of $795.52 million of Series 2016A tax-exempt GOs in three term maturities of 2035, 2040 and 2044. The $79.49 million of Series 2016B taxables are tentatively structured as a 2033 bullet.
According to a market source, the deal is being offered to yield 7.70% with a 7.50% coupon in 2036, 7.75% with a 7.25% coupon in 2041 and 7.75% with a 7% coupon in 2044.
The Chicago BOE has seen rating downgrades, state takeover talk and a cash crunch as of late. S&P cut the CPS two notches to B-plus while Fitch chopped its rating by three notches, also to B-plus. The schools get their highest marks from Kroll Bond Ratings Agency, which gives the Board of Ed a grade of triple-B.
Since 2005, the windy city BOE has sold about $6.9 billion of bonds, with the most issuance occurring in 2009 and 2010 when it issued $1.1 billion and $845 million, respectively. The board did not come to market at all in 2014 and issued only $356 million in 2006. The BOE has issued an average of 2.6 times a year since 2005.
Secondary Market
Treasuries were stronger midday on Tuesday. The yield on the two-year Treasury dipped to 0.85% from 0.87% on Monday, while the 10-year Treasury yield fell to 2.01% from 2.02% and the 30-year Treasury bond yield decreased to 2.79% from 2.80%.
The latest read of the triple-A benchmark scale from MMD has all maturities steady from Monday's close.
Municipals finished mostly stronger on Monday. The yield on the 10-year benchmark muni general obligation was steady from 1.75% on Friday, while the 30-year muni yield fell one basis point to 2.75% from 2.76%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated on Monday at 86.5% compared to 85.4% on Friday, while the 30-year muni to Treasury ratio stood at 98.1% versus 97.8%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 34,477 trades on Monday on volume of $5.412 billion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $108.8 million to $8.29 billion on Tuesday. The total is comprised of $2.81 billion competitive sales and $5.48 billion of negotiated deals.
