Munis soften; secondary trading thin on volatility, holiday; Southern California Water prices

By Cristal Cody

Eureka Springs, Ark., June 29 – Municipal bonds traded modestly lower in mostly quiet secondary trading on Wednesday.

“The government market is very, very volatile, and as a result, it’s tamped down enthusiasm for our market,” a municipal bond trader said. “The market is definitely skittish, and we’re heading into a three-day weekend, so people are cautious right now.”

Bonds ended about 1 basis point to 2 bps weaker.

Treasuries fell on Wednesday as stocks, gold and crude oil finished the day stronger. The 10-year Treasury note yield rose 4 bps to 1.49%.

“The market’s come a long way in the past month,” the trader said. “Yields are almost at historic lows, and people just feel the market is high right now and don’t want to commit to supporting these levels.”

Municipal bond market participants have been focusing on new issues this week including South Carolina Public Service Authority’s $750 million sale of revenue obligations that priced during the session.

“New issues are being priced to move, very cheap,” a source said.

In other muni bond deal action, the Metropolitan Water District of Southern California detailed its $239,455,000 offering of water revenue refunding bonds.

Coming up in the primary market, the Massachusetts Port Authority plans to price $223,035,000 of bonds (Aa2/AA/AA) in two parts, according to a preliminary official statement.

Southern California Water prices

The Metropolitan Water District of Southern California brought $239,455,000 of series 2016A water revenue refunding bonds to the primary market, according to a new issue statement.

The bonds (Aa1/AAA/AA+) priced with 5% coupons across the serial maturities from July 1, 2028 through July 1, 2036. The deal also included two tranches of term bonds priced at par.

BofA Merrill Lynch and Siebert Brandford Shank & Co. LLC were the senior managers of the negotiated offering.

Proceeds will be used to refund the district’s series 2005C and 2006A-B water revenue bonds.

Massachusetts Port preps sale

Looking ahead in the deal pipeline, the Massachusetts Port Authority plans to price $223,035,000 of bonds (Aa2/AA/AA) in two parts, according to a preliminary official statement.

The deal includes $50,995,000 of series 2016A revenue refunding bonds with serial maturities from July 1, 2017 through July 1, 2038 and $172.04 million of series 2016B revenue bonds with terms due July 1, 2043 and July 1, 2046.

J.P. Morgan Securities LLC is the bookrunner for the negotiated transaction. Ramirez & Co., Inc. and Wells Fargo Securities, LLC are co-managers.

Proceeds from the series 2016-A will be used to refund all or a portion of the authority’s outstanding series 2007A revenue bonds and series 2008A variable-rate demand revenue bonds. Proceeds from the series 2016-B bonds will be used to finance certain capital improvements and to redeem $25 million of outstanding bond anticipation notes.

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