The municipal market was mostly flat amid light to moderate secondary trading activity Tuesday, as an upsized $963 million tax-exempt New York City general obligation deal priced in the primary.
“The firmer tone carried through, even though there wasn’t a ton trading,” a trader in New York said. “In the belly of the curve, we might have been up a basis point or two. But you could call it flat and really not be wrong.”
In the new-issue market Tuesday, Barclays Capital and Loop Capital Markets priced $997.8 million of GOs for New York City in two series. The deal was upsized from an originally planned $800 million due to demand, said city Comptroller John Liu.
Bonds from the smaller Series A mature from 2011 through 2021, with yields ranging from 0.73% with a 2% coupon in 2012 to 3.23% with a 5% coupon in 2021.
Bonds maturing in 2011 were decided via sealed bid. The bonds are callable at par in 2020.
Bonds from the larger Series B mature from 2012 through 2033 with a term bond in 2037.
Yields range from 0.73% with a 3% coupon in 2012 to 4.39% with a 4.25% coupon in 2037. They are callable at par in 2020.
Through a two-day retail order period, the city sold $373 million to retail investors and received $617 million of institutional orders for the remaining $590 million of bonds, a press release said.
Liu also noted that “what makes this deal even more unique is that, rather than follow the typical rotation, we opened up the opportunity … to as many firms as wanted to.”
Barclays and Loop were selected two weeks ago.
“Going this route did result in some competition and, in the end, it yielded dividends for the city,” Liu said.
The bonds are rated Aa2 by Moody’s Investors Service and AA by Standard & Poor’s and Fitch Ratings.
The Treasury market showed some losses Tuesday. The benchmark 10-year note was quoted near the end of the session at 3.05% after opening at 2.99%.
The 30-year bond was quoted near the session’s end at 4.08% after opening at 4.02%. The two-year note was quoted near the session’s end at 0.65% after opening at 0.58%.
The Municipal Market Data triple-A scale yielded 2.57% in 10 years and 3.67% in 20 years Tuesday, matching Monday’s levels. The scale yielded 3.97% in 30 years Tuesday, also matching Monday.
“We’re pretty much just unchanged,” a Los Angeles trader said. “It still feels firmer, but I’m not seeing any movement.”
Tuesday’s triple-A muni scale in 10 years was at 84.3% of comparable Treasuries and 30-year munis were at 97.3%, according to MMD, while 30-year tax-exempt triple-A GOs were at 104.5% of the comparable London Interbank Offered Rate.
Elsewhere in the new-issue market Tuesday, the Florida Water Pollution Control Financing Corp. competitively sold $225 million of water pollution control revenue bonds to Bank of America Merrill Lynch.
The bonds mature from 2011 through 2030, with yields ranging from 1.93% with a 5% coupon in 2016 to 3.50% priced at par in 2024. Bonds maturing from 2011 through 2015, in 2019, 2023, and from 2025 through 2030 were sold but not available.
The bonds are callable at 101 in 2020, declining to par in 2021. The credit is rated triple-A by all three major rating agencies.
Morgan Stanley priced $129.2 million of second series revenue bonds for the San Francisco Airport Commission in two series.
Bonds from the $122.1 million Series F mature in 2035 and 2040, yielding 5.00% priced at par and 5.05% with a 5% coupon, respectively. The bonds are callable at par in 2020.
Bonds from the $7.2 million Series G mature in 2040, yielding 5.05% with a 5% coupon. They are callable at par in 2020. The credit is rated A1 by Moody’s, A by Standard & Poor’s, and A-plus by Fitch.
Baltimore County competitively sold $72.6 million of refunding bonds to Bank of America Merrill in two series.
Bonds from the larger $59.4 million series of metropolitan district bonds mature from 2011 through 2030, with yields ranging from 0.25% with a 2% coupon in 2011 to 3.08% with a 4% coupon in 2023. Bonds maturing from 2024 through 2030 were sold but not available. The bonds are callable at par in 2020.
Bonds from the smaller $13.3 million of consolidated public improvement bonds mature from 2011 through 2022, with yields from 0.25% with a 2.5% coupon in 2011 to 2.91% with a 4% coupon in 2022. The bonds are callable at par in 2020.
The credit is rated triple-A by all three major rating agencies.
California’s Oxnard Union High School District competitively sold $50 million of GO bonds to Southwest Securities.
The bonds mature from 2011 through 2030, with term bonds in 2035 and 2040. Yields range from 0.50% with a 3% coupon in 2011 to 4.78% with a 5% coupon in 2040.
The bonds, which are callable at par in 2020, are insured by Assured Guaranty Municipal.
In economic data released Tuesday, the consumer confidence index slumped to 50.4 in July from an upwardly revised 54.3 last month. The June index was originally reported as 52.9. Economists polled by Thomson Reuters predicted the index would be 51.0.
