Prices of top-rated municipal bonds were steady at mid-session, according to traders.
Meanwhile, the municipal bond market is prepared to see more supply on Wednesday led by the pricing of the Salt River Project's $887 million of revenue bonds.
Secondary Market
The yield on the 10-year benchmark muni general obligation on Wednesday was flat from 2.24% on Tuesday, while the yield on the 30-year GO was unchanged from 3.21%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were mixed on Wednesday as the yield on the two-year Treasury note declined to 0.57% from 0.60% on Tuesday, while the 10-year yield was unchanged at 2.27% and the 30-year yield increased to 3.04% from 3.02%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 99.2% versus 97.8% on Monday, while the 30-year muni to Treasury ratio stood at 106.5% compared to 104.8%, according to MMD.
Primary Market
Goldman Sachs priced the Salt River Project Agricultural Improvement Power District, Ariz.'s $886.54 million of Series 2015A Salt River Project electric system revenue bonds for institutions after a one-day retail order period.
The bonds were priced for institutions as 5s to yield 0.55% in 2016, 0.85% in 2017, 1.60% in 2020, 1.84% in 2021, 2.06% in 2022, 2.65% in 2026, 2.76% in 2027, and 2.87% in 2028; and to yield from 3.58% with a 4% coupon and 3.23% with a 5% coupon in a split 2032 maturity to 3.385% with a 3% coupon and 3.38% with a 5% coupon in a 2036 split maturity. A 2041 term bond was priced as 5s to yield 3.52% and a 2045 term was priced as 5s to yield 3.56%; a 2015 maturity was offered as a sealed bid.
The bonds were priced on Tuesday for retail to yield 0.48% with 4% and 5% coupons in a split 2016 maturity and 0.85% with a 5% coupon in 2017; from 1.62% with a 5% coupon in 2020 to 2.06% with a 5% coupon in 2022; from 2.65% with a 5% coupon in 2026 to 2.87% with a 5% coupon in 2028; as 4s to yield 3.50% in 2033; as 3 1/2s to yield 3.75% and as 5s to yield 3.28% in a split 2035 maturity. There were no retail orders taken in 2032, 2034, 2036 or 2045; the 2016 maturity was offered as a sealed bid. The issue is rated Aa1 by Moody's Investors Service and AA by Standard & Poor's.
The deal is expected to produce about $300 million of new money for SRP's capital projects, with the rest of the bonds refunding outstanding debt for savings.
Since 1997, the Salt River Project has issued roughly $7.31 billion of bonds. The years that saw the most issuance were 2002 and 2009, when $1.31 billion and $1.04 billion were sold, respectively. SRP did not come to market in 1998-2000, 2004 or 2007, or 2013-2014.
SRP does not have any other bond issues planned after this one, according to SRP Corporate Treasurer Steve Hulet.
"SRP's six-year financial plan includes capital expenditures to meet future electric system growth and replacement of aging infrastructure," Hulet said. "We would anticipate funding a portion of that capital plan with bond issues. However, SRP has no specific plans for a bond sale following the currently proposed sale."
When SRP does come to market, it usually brings large amounts of debt. The agency was considering issuing as much as $1.5 billion in the current sale before it was downsized.
Meanwhile, JPMorgan priced the Las Vegas Valley Water District, Nev.'s $388.12 million of Series 2015 A, B and C limited tax GO refunding bonds. The issue is rated Aa1 by Moody's and AA-plus by S&P.
The series A bonds for $170.645 million were priced to yield from 0.80% with a 4% coupon in 2017 to 2.94% with a 5% coupon in 2026. The 2016 maturity was offered as a sealed bid. The series B bonds for $176.040 million were priced to yield from 0.99% with a 4% coupon in 2017 to 2.97% with a 5% coupon in 2027. The 2016 maturity was offered as a sealed bid. The series C bonds for $41.435 million were priced to yield from 0.91% with a 4% coupon in 2017 to 3.34% with a 3.125% coupon in 2029. The 2016 maturity was offered as a sealed bid.
JPMorgan priced the Harris County Cultural Education Facilities Finance Corp.'s $193.89 million of hospital revenue bonds for the Texas Children's Hospital. The Series 2015-1 bonds were priced as 5s to yield from 0.95% in 2017 to 3.62% in 2033; a 2034 maturity was priced as 4s to yield 4.06%. A 2016 maturity was offered as a sealed bid. The issue is rated Aa2 by Moody's and AA by S&P and Fitch.
Also, Stifel is expected to price the Chippewa Valley Schools, Mich.'s $296.3 million of refunding bonds consisting of $99.7 million of Series 2015 Series A tax-exempts and $196.55 million of Series B taxables. The issue is rated Aa2 by Moody's and AA-minus by S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $1.192 billion to $13.589 billion on Wednesday. The total is comprised of $4.320 billion competitive sales and $9.269 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 44,934 trades on Tuesday on volume of $10.583 billion.
The most active bond, based on the number of trades, was the Montgomery, Ala., Medical Clinic Board's Series 2015 1976 East first mortgage revenue bonds, Waterford Place Assisted Living Facility 7s of 2045, which traded 302 times at an average price of 98.453 with an average yield of 7.125%. The bonds were initially priced at 98.425 to yield 7.125%.
Richard Williamson contributed to this report.
