Top-quality municipal bonds ended unchanged on Tuesday, according to traders, as more supply hit the screens, led by the warmly received Texas Water Development Board deal.
The Federal Open Market Committee began its two-day monetary policy meeting, keeping Tuesday's trading subdued and primary activity quiet for Wednesday.
The FOMC will announce its decision on interest rates Wednesday afternoon, but most policy experts believe the Federal Reserve won't raise interest rates at this meeting.
Primary Market
Bank of America Merrill Lynch priced the Texas Water Development Board's $599.33 million of Series 2016 Master Trust State Water Implementation Revenue Fund for Texas revenue bonds for institutions on Tuesday after holding a one-day retail order period on Monday.
The issue was priced to yield from 0.76% with a 4% coupon in 2017 to 3.02% with a 3.125% coupon and 2.66% with a 4% coupon in a split 2036 maturity. A split 2041 maturity was priced as 4s to yield 2.76% and as 5s to yield 2.51%; a triple split 2046 maturity was priced as 4s to yield 2.81%, 5 1/4s to yield 2.50% and 5s to yield 2.56%; and a 2051 maturity was priced as 4s to yield 2.94%.
The SWIRFT bonds are rated triple-A by S&P Global Ratings and Fitch Ratings.
TWDB said the deal was almost two-times oversubscribed.
"High demand for AAA-rated SWIRFT bonds translates into significant savings for the board's underlying borrowers," said Bech Bruun, chairman of the TWDB. "We look forward to building on the success of the program when SWIRFT Series 2017 comes to market next fall."
Since 2006, the TWDB has issued almost $4.5 billion of bonds, with the most issuance occurring in 2015 when it sold about $1.3 billion of debt. The board didn't come to market in 2011 or 2014.
Also on Tuesday, Goldman Sachs priced the New Jersey Healthcare Facility Authority's $225.23 million of Series 2016 refunding bonds for the Atlantic Health Corp.
The issue was priced to yield from 0.82% with a 5% coupon in 2017 to 3.20% with a 3.125% coupon in 2036; a 2041 term bond was priced as 4s to yield 3.20%. The deal is rated A1 by Moody's Investors Service and AA-minus by S&P.
Goldman also priced the Missouri Health and Educational Facilities Authority's $129.87 million of health facilities revenue bonds for the Children's Mercy Hospital.
The issue was priced to yield from 1.22% with a 5% coupon in 2020 to 2.83% with a 5% coupon in 2036; a 2039 maturity was priced as 4s to yield 3.31%. The deal is rated A-plus by S&P.
JPMorgan Securities priced the Wisconsin Housing and Economic Development Authority's $141.44 million of homeownership revenue bonds.
The $29.55 million of Series 2016E bond subject to the alternative minimum tax were priced as 3 1/2s to yield 2.10% in 2046 as Planned Amortization Class bonds with an average life of 4.9 years. The $111.89 million of Series 2016D non-AMT bonds were priced at par to yield from 0.80% and 0.83% in a split 2017 maturity to 2.50% and 2.55% in a split 2027 maturity. A 2032 maturity was priced at par to yield 3%, a 2036 maturity was priced at par to yield 3.30%, a 2041 maturity was priced at par to yield 3.45% and a split 2046 maturity was priced at par to yield 3.50% and as 3 1/2s to yield 1.95% as PAC bonds with an average life of 4.9 years.
The deal is rated Aa2 by Moody's and AA by S&P.
Citigroup priced the Erie County Industrial Development Agency, N.Y.'s $133.69 million of Series 2016A school facility refunding revenue bonds for the Buffalo City School District.
The issue was priced at par to yield 0.75% in 2017 and as 5s to yield 0.77% in 2018 and as 5s to yield from 1% in 2020 to 1.62% in 2025 and as 5s to yield from 2.14% in 2029 to 2.26% in 2031. The deal is rated Aa2 by Moody's and AA by S&P.
BAML priced the Rhode Island Health and Educational Building Corp.'s $138.71 million of Series 2016B hospital financing revenue refunding bonds for Care New England.
The issue was priced as 5s to yield from 2.05% in 2018 to 3.47% in 2026 and 3.83% in 2031 and 4.03% in 2036. The deal is rated BB by S&P and BBB-minus by Fitch.
RBC Capital Markets received the written award on the American Municipal Power Inc.'s $209.53 million of combined hydroelectric projects revenue green bonds.
The issue was priced to yield from 1.12% with a 4% coupon in 2020 to 2.76% with a 5% coupon in 2038; a 2041 maturity was priced as 5s to yield 2.81% and a split 2046 maturity was priced as 5s to yield 2.86% and as 4s to yield 3.13%. The deal is rated A2 by Moody's, A by S&P and A-minus by Fitch.
In the competitive arena, the New York City Municipal Water Finance Authority sold $201 million of Fiscal 2017 Series AA water and sewer system second general resolution revenue bonds on Tuesday.
JPMorgan won the deal with a true interest cost of 3.25%. The $150 million of Series AA Block 1's were priced as 3s to yield 3.10% in a 2046 bullet maturity. The $51 million of Block2's were priced as 4s to yield 2.83% in a 2046 bullet maturity. The deal is rated Aa1 by Moody's AA-plus by S&P and Fitch.
No major deals are slated to come to market on Wednesday, the day of the FOMC announcement.
Goldman had tentatively planned to price the Pennsylvania Turnpike Commission's $649.89 million of subordinate revenue refunding bonds on Tuesday. But the underwriter said the deal would be moved back until Thursday.
The offering is expected to consist of $391.52 million of Subseries A bonds, $82.17 million of Subseries B taxables and $176.2 million of motor license fund enhanced bonds. The two subseries are rated A3 by Moody's and A-minus by Fitch, while the enhanced motor license series is rated A2 by Moody's and A-minus by Fitch.
Secondary Market
The yield on the 10-year benchmark muni general obligation finished steady from 1.57% on Monday, while the yield on the 30-year was flat from 2.33%, according to the final read of Municipal Market Data's triple-A scale.
Treasuries were little changed on Tuesday. The yield on the two-year Treasury was flat from 0.77% on Monday, the 10-year Treasury yield declined to 1.69% from 1.70% and the yield on the 30-year Treasury bond decreased to 2.43% from 2.44%.
The 10-year muni to Treasury ratio was calculated at 93.0% on Tuesday compared to 92.7% on Monday, while the 30-year muni to Treasury ratio stood at 95.8% versus 95.3%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 32,056 trades on Monday on volume of $8.37 billion.
