Municipals end flat ahead of FOMC; supply led by $750 million Texas Transportation bond sale

By Sheri Kasprzak

New York, Sept. 14 – Municipals were largely unmoved Monday as the market awaits word from the Federal Open Market Committee about the first federal funds rate hike in nearly a decade.

Yields held steady, following in line with a little-moved Treasuries market. The 10-year AAA muni bond yield ended at 2.25% and the 30-year at 3.25%, said a trader in the afternoon.

Over in Treasuries, the 30-year bond yield held steady at 2.95%. The 10-year yield fell by 2 bps to 2.18%, the five-year note yield fell by 1 bp to 1.51%, and the two-year yield rose by 2 bps to 0.73%.

The week will offer about $6.86 billion of new offerings, including a significant offering from the Texas Transportation Commission.

Texas deal set

The commission is on the calendar this week with a $750 million offering of mobility fund general obligation refunding bonds (Aaa//AAA).

The bonds will be sold through senior managers J.P. Morgan Securities LLC and Piper Jaffray & Co.

The bonds are due 2016 to 2036.

Proceeds will be used to refund existing bonds for debt service savings.

Massachusetts, NYC prep deals

Although this week will remain rather light for supply, the market is already taking a look at next week’s larger slate, which includes two rather big deals from Massachusetts and the New York City Transitional Finance Authority.

Massachusetts will be in the market next Tuesday with $1.2 billion of general obligation revenue anticipation notes (MIG 1/SP-1+/F1+) via competitive offering.

That deal includes $400 million of series 2015A notes, $400 million of series 2015B notes and $400 million of series 2015C notes, which are due April 27, 2016, May 25, 2016 and June 22, 2016, respectively.

Proceeds will fund capital expenditures.

Also next Tuesday, the New York City Transitional Finance Authority will offer $1 billion of future tax secured subordinate bonds.

The deal includes $750 million of series 2016A-1 tax-exempt bonds, $190 million of series 2016A-2 taxable bonds and $60 million of series 2016A-3 taxable bonds.

Goldman Sachs & Co. leads the syndicate selling the bonds.

Proceeds will also be used to finance capital expenditures.

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