The Trinity Health Credit Group returned to the municipal bond market on Wednesday to sell its $894.75 million tax-exempt deal, a week after the offering was postponed due to unfavorable market conditions.
Also pricing were the South Carolina Public Service Authority's $957.045 million sale for Santee Cooper and the Michigan Finance Authority's $192.56 million deal for the Detroit School District.
Meanwhile, prices of top-rated municipal bonds finished lower on Wednesday, traders said, as yields on some maturities rose by as much as two basis points.
Primary Market
Trinity came to market with the $894.76 million composite issue, separated into three series, all of which were priced by Bank of America Merrill Lynch. The issue was rated Aa3 by Moody's Investors Service, AA-minus by Standard & Poor's and AA by Fitch Ratings.
The first series was priced for the Michigan Finance Authority. The Series 2015MI $561.61 million of hospital revenue and refunding bonds were priced to yield from 0.60% with a 5% coupon in 2016 to 3.37% with a 5% coupon in 2035; a 2038 split maturity was priced as 4s to yield 4.04% and as 5s to yield 3.44%. The 2015 maturity was offered as a sealed bid.
The second series was priced for the Idaho Health Facilities Authority. The $171.69 million of Series 2015ID revenue bonds were priced to yield from 0.48% with a 3% coupon in 2015 to 3.29% with a 5% coupon in 2033.
The last series was priced for Montgomery County, Md. The $161.46 million of Series 2015MD revenue bonds, were priced in a 2044 split maturity as 4s to yield at 3.98% and as 5s to yield at 3.38%.
Also on Wednesday, Barclays Capital priced South Carolina Public Service Authority's $957.045 million of Series 2015 revenue obligations for Santee Cooper. The issue is rated A1 by Moody's, AA-minus by S&P and A-plus by Fitch.
The Series A $450.01 million of tax-exempt refunding and improvement bonds were priced to yield from 0.48% with a 3% coupon in 2016 to 0.76% with a 3% coupon in 2017; from 1.28% with a 5% coupon in 2019 to 1.83% with a 5% coupon in 2021; from 2.30% with a 5% coupon in 2023 to 2.82% with a 5% coupon in 2026; as 5s to yield 3.10% in 2029; from 3.20% with a 5% coupon in 2031 to 3.80% with a 3.625% coupon in 2037; a split 2040 maturity was priced as 3 3/4s and as 4s to each yield 3.92%; a split 2045 maturity was priced at par to yield 4% and as 5s to yield 3.59%; a 2050 maturity was priced as 5s to yield 3.89%; and a 2055 maturity was priced as 5s to yield 4%.
The Series B $64.935 million of tax-exempt refunding bonds were priced as 5s yield from 2.13% in 2022 to 2.55% in 2024. The Series C $272 million of tax-exempt refunding bonds were priced as 5s to yield from 0.98% in 2016 to 2.53% in 2022. The Series D $169.72 million of taxable bonds were priced at par to yield 0.425% in 2045.
"The spreads on both of the big deals came in wider than originally anticipated," a New York trader said. "The market is kind of soft right now, as Treasuries didn't get hit as hard as we thought."
In other action on Wednesday, JPMorgan Securities priced the Michigan Finance Authority's $192.56 million of bonds for the Detroit School District. The bonds were structured as state qualified unlimited tax general obligation local project bonds. The bonds were priced to yield from 0.72% with a 3% coupon in 2016 to 2.94% with a 5% coupon in 2025. The issue is rated AA-minus by S&P and AA by Fitch.
The transaction is refinancing outstanding bonds issued in 2005 maturing from 2016 through 2025, according to preliminary bond documents. The bonds are ULT GOs secured by ad valorem property tax pledge and backed by the state's pledge to cover payments if the long-troubled district is unable to make payments.
In the competitive arena, Citigroup Global Markets won the Maryland DOT's $280 million of consolidated transportation bonds with a true interest cost of 2.5635%. The bonds were priced to yield from 0.68% with a 5% coupon in 2018 to 2.87% with a 4% coupon in 2030. The issue is rated Aa1 by Moody's, AAA by S&P and AA-plus by Fitch.
Additionally, Morgan Stanley priced the Pennsylvania Housing Agency's $118.8 million of single-family mortgage revenue bonds in two series. The $98.8 million Series 2015-116A AMT bonds were priced at par to yield from 0.19% in 2015 to 3.95% in 2035; a 2035 term was priced as 3 1/2s to yield 1.78%. The $20 million Series 2015-116B non-AMT bonds were priced at par to yield 3.95% in 2040 and 4% in 2045. The issue is rated Aa2 by Moody's and AA-plus by S&P
Secondary Market
Prices of top-quality munis ended lower on Wednesday. The yield on the 10-year benchmark muni general obligation rose two basis points to 2.04% from 2.02% on Tuesday, while the yield on 30-year GOs rose two basis points to 2.86% from 2.84%, according to the final read of Municipal Market Data's triple-A scale.
Since the start of the month, the yield on the muni 10-year benchmark general obligation has risen 30 basis points, while yield on the 30-year GO is 36 basis points higher, according to MMD.
Treasury prices were slightly lower on Wednesday in cautious trade as worries about problems with Greece in the EuroZone combined with concerns over volatile oil prices. Action was muted ahead of next week's release of the minutes from the Federal Reserve's January meeting.
The two-year Treasury note's yield rose to 0.66% from 0.65% on Tuesday, while the 10-year yield increased to 1.99% from 1.98% and the 30-year yield rose to 2.57% from 2.56%.
The 10-year muni to Treasury ratio was calculated at 102.6% from 101.6% on Tuesday, while the 30-year muni to Treasury ratio stood at 111.7% compared to 110.5%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar fell $1.103 billion to $9.718 billion on Wednesday. The total is comprised of $2.065 billion competitive sales and $7.652 billion of negotiated deals.
MSRB Reports Previous Session's Activity
The Municipal Securities Rulemaking Board reported 36,795 trades on Tuesday on volume of $8.563 billion. Most active on Tuesday, based on the number of trades, was the Wayne County Building Authority, Mich., 2010 taxable jail 10s of 2040, which traded 198 times with an average price of 97.403, an average yield of 10.287%.
