CHICAGO -- Local Michigan issuers continue to trickle back into the municipal bond market.
The triple-A rated city of Troy was the latest Tuesday, pricing $15 million of uninsured limited-tax general obligation bonds, paying between 50 to 100 basis points more on interest rates than similar rated debt, Municipal Market Data yields show.
Troy was the third local Michigan issuer to come to market in the last week after several governments postponed deals last month. Investors, skittish about Detroit’s bankruptcy and the city’s treatment of its general obligation bonds as unsecured, shied away from local GOs in the weeks after the Motor City’s July 18 Chapter 9 filing.
Since Thursday, three issuers, Battle Creek, Genesee County, and now Troy, have come to market. The city of Westland is scheduled to price tomorrow.
Troy’s debt matures from 2014 through 2033. Debt maturing in 2017 with a 4% coupon had an interest rate of 1.51% compared to 1.06% for similar rated debt according to the MMD scale. The city paid 4.15% for bonds maturing in 2025 with a 5% coupon compared with 3.10% on the MMD scale. Bonds with a 2033 maturity saw an interest rate of 4.84% with a 4.75% coupon, compared to 3.99% on MMD.
The city’s finance director was not immediately available for comment Tuesday after the sale.
Fifth Third Securities was the underwriter.
Genesee County, with underlying ratings of AA by Standard & Poor’s and A2 by Moody’s Investors Service, saw yields range from 0.58% on 2014 maturity and 3% coupon to 5.51% on bonds maturing in 2038. All the Genesee debt is insured by Build America Mutual, rated AA by Standard & Poor’s. JPMorgan was underwriter.
The 5.51% rate is more than 1% higher than the rate on benchmark municipal bonds, according to Bloomberg.
Genesee County bonds maturing in 2020 saw an interest rate of 3.19%; bonds maturing in 2023 saw a 4.03% rate; 2028 maturity saw a 4.87% rate and 2033 5.28%.
