Many of the week’s largest deals priced Tuesday afternoon, including over $450 million of high-grade Minnesota general obligation bonds that traders said looked rich.
Triple-B rated Puerto Rico Electric Power Authority and Chicago O’Hare International Airport bonds also released pricing guidance and wires, attracting investors in search for yield.
With the focus on the primary market, secondary activity slowed Tuesday afternoon. “There is not much secondary activity right now,” a New York trader said. “The new-issues are dominating the market so there is no secondary action until those price.”
Tuesday afternoon, Citi bought $465.2 million of Minnesota GOs, rated Aa1 by Moody’s Investors Service and AA-plus by Standard & Poor’s and Fitch Ratings.
The first pricing consisted of $265.2 million of various purpose GOs. Yields ranged from 0.72% with a 5% coupon in 2016 to 4.38% with a 4.25% coupon in 2033. Bonds maturing in 2014 and 2015 were offered via sealed bid. The bonds are callable at par in 2023.
The second pricing consisted of $200 million of trunk highway GOs. Yields ranged from 0.72% with a 5% coupon in 2016 to 4.35% with a 4.25% coupon in 2033. Bonds maturing in 2014 and 2015 were offered via sealed bid. The bonds are callable at par in 2023.
Traders said the prices looked expensive. Yields on bonds with 5% coupons maturing between 2016 and 2026 were priced at the Municipal Market Data scale to as much as five basis points above. Meanwhile, the triple-A to double-A MMD spread ranged from 10 to 28 basis points on those same maturities.
Morgan Stanley issued a consensus scale for $600 million of PREPA power revenue bonds, rated Baa3 by Moody’s, BBB by Standard & Poor’s, and BBB-minus by Fitch. Pricing is expected Wednesday.
The bonds yielded 6.75% with a 7.25% coupon in 2030, 7% priced at par in 2033, 7.05% with a 6.75% coupon in 2036, and 7.15% with a 7% coupon in 2043. The bonds are callable at par in 2023 except bonds maturing in 2030 which are callable at par in 2018.
Bank of America Merrill Lynch priced $249.7 million of O’Hare Airport customer facility charge senior lien revenue bonds, rated Baa1 by Moody’s and BBB by Standard & Poor’s. Bonds maturing between 2028 and 2033 and portions maturing in 2043 were wrapped by Assured Guaranty Municipal Corp., and rated A2 by Moody’s and AA-minus by Standard & Poor’s,
Yields ranged from 2.17% with a 5% coupon in 2018 to 5.75% with a 5.625% coupon and 5.95% with a 5.75% coupon in a split 2043 maturity. The bonds are callable at par in 2023.
Also in the primary market, Barclays priced for retail $639.9 million of Regents of the University of California medical center pooled revenue bonds, rated Aa2 by Moody’s, AA-minus by Standard & Poor’s, and AA by Fitch. Institutional pricing is expected Wednesday.
Yields ranged from 0.53% with a 2% coupon in 2015 to 5% priced at par in 2043. Bonds maturing in 2014 were offered via sealed bid. Portions of bonds maturing between 2027 and 2048 were not offered for retail. The bonds are callable at par in 2023.
Monday, yields on the Municipal Market Data scale ended as much as three basis points higher. The 10-year yield rose one basis point to 2.72% and the 30-year yield increased three basis points to 4.25%. The two-year finished flat at 0.43% for the 14th consecutive session.
Yields on the Municipal Market Advisors scale ended as much as two basis points higher. The 10-year and 30-year yields rose one basis point each to 2.93% and 4.33%, respectively. The two-year was unchanged at 0.55% for the third session.
After weakening in the morning session, Treasuries traded flat Tuesday afternoon. The benchmark 10-year yield and 30-year yield were steady at 2.64% and 3.74%, respectively. The two-year was steady at 0.32%.
