Prices of top-rated municipal bonds closed weaker on Tuesday, traders said, with yields on some longer-dated maturities rising by as much as five basis points.
Treasury prices were also lower as the Federal Open Market Committee began the first day of its two-day meeting on monetary policy. The Fed will announce a decision on interest rates on Wednesday afternoon. Yields generally move higher in cautious trade ahead of the FOMC rate statements.
In the primary, several new deals came to market, topped by a big competitive sale from a Texas school issuer and a large negotiated offering by a California healthcare issuer.
Secondary Market
The yield on the 10-year benchmark muni general obligation rose three basis points to 2.03% from 2.00% on Monday, while the yield on the 30-year GO increased by five basis points to 2.95% from 2.90%, according to the final read of MMD's triple-A scale.
Treasury prices were also lower on Tuesday as the yield on the two-year Treasury note increased to 0.56% from 0.52% on Monday, while the 10-year yield was up to 1.98% from 1.92% and the 30-year yield rose to 2.67% from 2.60%.
The Federal Open Market Committee began the first day of its two-day meeting on monetary policy. It will announce a decision on interest rates on Wednesday afternoon. Treasury yields generally move higher in cautious trade ahead of the FOMC rate statement.
The 10-year muni to Treasury ratio was calculated on Tuesday at 102.5% versus 104.0% on Monday, while the 30-year muni to Treasury ratio stood at 110.2% compared to 111.1%, according to MMD.
Primary Market
In the competitive arena, the Humble Independent School District, Texas, sold $218.10 million of Series 2015A unlimited tax school building and refunding bonds.
Bank of America Merrill Lynch won the issue with a true interest cost of 3.0663%. The bonds were priced as serials to yield from 0.25% with a 5% coupon in 2016 to 3.58% with a 3.50% coupon in 2039.
The bonds are backed by the Texas Permanent School fund guarantee and rated triple-A by Moody's Investors Service and Standard & Poor's.
The last time the district sold bonds competitively was on April 10, 2007, when Prager Sealy won $25 million of Series 2007A unlimited tax school building bonds with a true interest cost of 4.6243%.
In the negotiated sector, Goldman, Sachs priced the Grossmont Healthcare District, Calif.'s $226.85 million of general obligation bonds. The $24.51 million of 2006 election 2015 Series C bonds were priced as 5s to yield from 1.30% in 2019 to 2.66% in 2027. The $202.34 million of Series D refunding bonds were priced to yield from 0.40% with a 2% coupon in 2016 to 3.65% with a 4% coupon in 2035; a 2040 term bond was priced as 4s to yield 3.75%. The bonds are rated Aa2 by Moody's.
Goldman also priced the Illinois Housing Development Authority's $102 million of Series 2015 multifamily housing revenue floating-rate notes for the Marshall Field Garden Apartment Homes. The FRNs were priced at par to yield 100 basis points above the SIFMA rate in 2050. There is a mandatory put date in 2025. The notes are FNMA-backed and rated triple-A by Moody's.
Bank of America Merrill Lynch priced the Nebraska Public Power Generation Agency's $186.89 million of Series 2015A revenue refunding bonds for the Whelan Energy Center's Unit 2. The bonds were priced as 5s to yield from 1.16% in 2018 to 3.46% in 2032. The issue is rated A2 by Moody's, BBB-plus by S&P and A-minus by Fitch Ratings.
BAML also priced Tallahassee, Fla.'s $106.82 million of Series 2015A health facilities revenue refunding bonds for the Tallahassee Memorial Healthcare, Inc., Project. The issue was priced as 4s to yield 4.20% in 2035, as 5s to yield 4.13% in 2040 and as 5s to yield 4.19% in 2044. The bonds are rated Baa1 by Moody's.
JPMorgan Securities priced the New Hampshire Health and Educational Facilities Authority's $115.64 million of Series 2015 revenue bonds for the University System of New Hampshire. A retail order period was held on Monday.
The bonds were priced to yield from 0.35% with a 3% coupon in 2016 to 3.38% with a 5% coupon and 3.83% with a 3.625% coupon in a 2033 split maturity. A 2035 spilt maturity was priced as 4s to yield 3.80% and as 5s to yield 3.45%; a 2036 maturity was priced as 5s to yield 3.48%; a 2040 maturity was priced as 5s to yield 3.55%; and a 2045 maturity was priced as 5s to yield 3.60%. The bonds are rated Aa3 by Moody's and A-plus by S&P.
The HEFA has sold roughly $5.634 billion of bonds since 1995. The highest years of issuance came in 2007 and 2009, when it issued $588.1 million and $592 million of debt, respectively. The Granite State's HEFA saw its low years of issuance in 1995 and 2013, when it sold just $24.7 million and $57 million, respectively. Although it did not issue bonds in 2014, it has been coming to market at an average of roughly 9 times a year since 1995.
