The state of Louisiana defied naysayers on Wednesday and sold $335 million of municipal bonds in the primary market.
The State Bond Commission approved the sale of the various purpose general obligation refunding bonds. The certified winner was Wells Fargo Securities with a true interest cost of 3.295654%. There were six registered bidders for the bonds, according to the Bond Commission.
The issue was rated Aa2 by Moody's Investors Service and AA by Standard & Poor's and Fitch Ratings. Pricing information was not immediately available.
The sale took place successfully despite questions surrounding the state's projected $1.6 billion deficit for fiscal 2016. Almost two pages of the preliminary official statement were dedicated to describing the state's woes and the measures being proposed by Gov. Bobby Jindal and Legislature to close the budget gap.
"Despite the circumstances, the sale went very well," said State Treasurer John Kennedy. "We were about 25 basis points higher than our last sale."
The last time the state sold bonds competitively was on Nov. 20, 2014, when Citi won $199.99 million of Series 2014 D-1 GOs with a TIC of 3.0317%.
Since 1995, Louisiana has sold $8.47 billion of GO debt. The largest issuances came in 2012 and 2014 when the Pelican State sold $1.01 billion and $914 million of debt, respectively. The state sold no bonds in 1999 or in 2007.
Primary Market
Elsewhere in the primary, Seattle competitively sold two issues totaling $323 million. Both sales are rated Aa1 by Moody's, triple-A by S&P and AA-plus by Fitch.
Bank of America Merrill Lynch won the $156.88 million of Series 2015 unlimited tax GO improvement bonds with a TIC of 3.5911%. The bonds were priced to yield from 0.45% with a 5% coupon in 2016 to 3.78% with a 4% coupon in 2040; a 2044 term bond was priced as 4s to yield 3.85%.
Citi won the $166.34 million of Series 2015A limited tax GO improvement and refunding bonds with a TIC of 2.3832%. The bonds were priced to yield from 0.20% with a 5% coupon in 2015 to 1.74% with a 5% coupon in 2021 and to yield from 2.12% with a 5% coupon in 2023 to 3.65% with a 4% coupon in 2035.
The last time Seattle sold bonds competitively was on April 1, 2014, when BAML won $62.77 million of Series 2014 limited tax GO improvement and refunding bonds with a TIC of 2.4898%.
The Los Angeles Unified School District sold $330 million of Series 2015A GO refunding bonds. JPMorgan won the bonds with a TIC of 1.8713%. Pricing information was not immediately available. The bonds are rated Aa2 by Moody's and AA-minus by S&P.
The last time LAUSD sold GOs competitively was on Sept. 22, 2004, when Bank of America Merrill Lynch won $16.9 million of 2004 Series D election of 2004 GOs with a TIC of 2.2031%.
In the negotiated sector, Loop Capital Markets priced the New York Triborough Bridge and Tunnel Authority's $225 million of Series 2015A general revenue bonds for MTA bridges and tunnels for retail investors. Academy Securities was co-senior manager on the deal. The institutional pricing will be held on Thursday.
The bonds were priced to yield from 0.93% with a 3% coupon in 2017 to 3.42% with a 5% coupon in 2035; a 2040 term was priced as 5s to yield 3.55%; a 2045 term was priced as 5s to yield 3.60%; and a 2050 term was priced as 5s to yield 3.73%. The 2015 and 2016 maturities were offered as sealed bids.
The issue is rated AA3 by Moody's and AA-minus by S&P and Fitch.
Secondary Market
Prices of top-rated municipal bonds were lower at mid-session. The yield on the 10-year benchmark muni general obligation was up as much as two basis points from 2.18% on Tuesday, while the yield on the 30-year GO rose by as much as one basis point from 3.13%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were lower on Wednesday as the yield on the two-year Treasury note increased to 0.63% from 0.62% on Tuesday, while the 10-year yield rose to 2.22% from 2.18% and the 30-year yield was up to 2.96% from 2.90%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 100.2% versus 101.3% on Monday, while the 30-year muni to Treasury ratio stood at 107.7% compared to 107.9%, according to MMD.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $1.176 billion to $11.227 billion on Wednesday. The total is comprised of $3.922 billion competitive sales and $7.305 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 44,830 trades on Tuesday on volume of $10.971 billion. The most active bond, based on the number of trades, was the Puerto Rico Sales Tax Financing Corp.'s sales tax revenue bonds first subordinate Series 2010 C 5 1/2s of 2040, which traded 175 times at an average price of 55.875 with an average yield of 10.516%. The bonds were initially priced at 100.00 to yield 5.50%.
Shelly Sigo contributed to this story.
