Texas Water gets $4B of orders as munis generate demand

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The municipal market had no trouble digesting the sizable issuance on Tuesday, with one deal garnering $4 billion of orders.

Bank of America priced Texas Water Development Board's ( /AAA/AAA) $876.94 million of state water implementation revenue fund master trust taxable bonds on Tuesday.

"We had a great market environment for this transaction, and saw lots of demand for our bonds," Peter Lake, Chairman of the TWDB. "We were thrilled to see how many people were excited for our bonds. The deal today netted dozens of new investors and we are always aiming to expand the investor base and increase diversification of those investors."

The deal received $4 billion of orders, even after an "aggressive" repricing.

"Yes, now is a great time to come to market but outcomes like this speak to strength of our credit. We serve an essential service and are part of a fast growing and critical state. The SWIRFT program is doing exactly what it was supposed to do," Lake said.

Wells Fargo priced New Jersey's Transportation Trust Fund Authority's (Baa1/BBB+/A-) $1 billion of program bonds.

Tuesday's bond sales

Click here for the TWBD sale

Click here for the New Jersey TTFA sale

Secondary market
Munis were stronger on the MBIS benchmark scale, with yields falling by less than one basis points in the both the 10-year and 30-year maturities. High-grades were weaker, with MBIS’ AAA scale showing yields increasing by three basis points in both the 10-year maturity and 30-year maturity.

On Refinitiv Municipal Market Data’s AAA benchmark scale, the yield on the 10-year dropped by three basis points to 1.40% and the 30-year muni GO fell by four basis points to 1.98%.

The 10-year muni-to-Treasury ratio was calculated at 85.6% while the 30-year muni-to-Treasury ratio stood at 94.6%, according to MMD.

Treasuries were mostly weaker as stock prices traded in the green. The Treasury three-month was yielding 1.921%, the two-year was yielding 1.615%, the five-year was yielding 1.507%, the 10-year was yielding 1.631% and the 30-year was yielding 2.089%.

Previous session's activity
The MSRB reported 29,133 trades Monday on volume of $8.49 billion. The 30-day average trade summary showed on a par amount basis of $10.87 million that customers bought $5.78 million, customers sold $3.22 million and interdealer trades totaled $1.86 million.

California, New York and Texas were most traded, with the Golden State taking 16.362% of the market, the Empire State taking 15.064% and the Lone Star State taking 10.859%.

The most actively traded security was the City of Los Angeles tax revenue anticipation notes 5s of 2020, which traded 17 times on volume of $53.4 million.

Treasury to sell $45B 4-week bills
The Treasury Department said it will sell $45 billion of four-week discount bills Thursday. There are currently $39.998 billion of four-week bills outstanding.

Treasury also said it will sell $40 billion of eight-week bills Thursday.

Two-year note auction
The Treasury Department Tuesday auctioned $40 billion of two-year notes, with a 1.50% coupon, a 1.612% high yield, a price of 99.780442.

The bid-to-cover ratio was 2.64.

Tenders at the high yield were allotted 20.87%. All competitive tenders at lower yields were accepted in full.

The median yield was 1.585%. The low yield was 0.880%.

Gary E. Siegel contributed to this report.

Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation.

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Primary bond market Secondary bond market State of California State of New York State of Texas Texas Water Development Board New Jersey Transportation Trust Fund Authority