The $371.05 million Chicago second lien water revenue bonds was priced with appealing yields.
PNC Capital priced the bonds with yields ranging from 0.70% with a 3% coupon in 2016 to 4.13% with a 5% coupon in 2044.
"If you can get something plus-100 to the MMD that's A rated, that's something to look at," a trader in New York said.
There is a sealed bid on 2015, and selling group members are the only ones that can place orders on the 2019, 2024 and 2032 maturities.
The 2019 maturity had a 1.84% yield with a 3% coupon, the 2024 had both a 3.20% yield and coupon, and the 2032 maturity had a 4.09% yield with a 4% coupon.
A trader on the west coast said the yields would be pleasing to investors who were worried the bonds may come too aggressively, and mentioned it was surprising 5% coupon bonds came with yields so high.
"It's probably a way for [the deal team] to hedge against uncertainty associated with Chicago's name," he said.
The trader in New York said the deal might potentially be repriced.
There are sinking funds on the two term bonds, in 2039 and 2044, and the bonds can be called at par in 2024.
The bonds are rated A3 by Moody's Investors Service, AA-minus from Standard & Poor's and AA by Fitch Ratings.
NYC Water Comes with One Maturity
Bank of America Merrill Lynch won the bid for the $200 New York City Municipal Water Finance Authority water and sewer system second general resolution revenue bonds, and priced the bonds with a yield of 3.90% with a 4% coupon on a sole 2045 maturity.
A second trader in New York said this structure is not necessarily "the standard."
"[Bank of America] basically took advantage of potential low long term rates they could lock in," he said.
He called the pricing "aggressive," and said he could not predict what demand would be for the bonds.
The bonds are rated Aa2 by Moody's and AA-plus by S&P and Fitch, and have an optional call at par in 2024.
Elsewhere in the Primary
The $100 million Mason County, W.Va., pollution control revenue bonds issued for the Appalachian Power Company Project were priced by J.P. Morgan Securities with a 1.625% coupon for the 2022 maturity.
The bonds' mandatory put date is Oct. 1, 2018, and there is no call option.
The deal is rated Baa1 by Moody's and triple-B by S&P.
The three-part $121.5 million Maryland Department of Housing and Community Development residential revenue bonds were marketed by Bank of America.
The $43.1 million not subject to the alternative minimum tax bonds were all priced at par to yield from 0.15% in 2015 to 3.75% in 2039, except for the final 2044 maturity that has a yield of 1.87% with a 4% coupon.
The 2044 maturity has an optional call on March 1, 2024, at 100.353, on September 1, 2024, at 101.04 and on March 1, 2025, at par.
The rest of the bonds can be called at par on March 1, 2024.
The $25.32 million section, subject to the alternative minimum tax, was also priced at par to yield from 0.25% in 2015 to 2.375% in 2021. The final 2036 maturity had a yield of 2.01% with a 4% coupon.
The bonds can all be called on March 1, 2024, except for the 2036 maturity which has an optional call of 101.266 on March 1, 2024, 100.962 on September 1, 2024, and par on March 1, 2025.
The third, federally taxable, part totaled $53.1 million and was priced at par to yield from 0.50% in 2015 to 2.857% in 2040.
For the third section there are sinking funds on the term bonds in 2029, 2032 and 2040.
All the bonds from the deal are rated Aa2 by Moody's.
Puerto Rico Highway Trans Top Secondary
The Puerto Rico Highway Transportation Authority's 5.25s in 2033 revenue refunding bonds was one of the most actively bonds traded in the secondary market on Wednesday morning, according to EMMA. The bond's yields have been falling since September 5, the day after the Puerto Rico Electric Power Authority appointed its new chief restructuring officer, Lisa Donahue .
The first trader in New York said the bond's active trading and strengthening had less to do with confidence in the new CRO and more to do with investors grabbing for yield.
Yields dropped to a low of 5.24% and a high of 5.43%, approximately 30 basis points lower than the low of 5.55% and the high of 5.73% the bonds were trading on Sept. 4, before the CRO appointment was announced.
"There's yield and there are people willing to take on risk, Puerto Rico [bond prices] have consistently grinded higher," he said.
The trader pointed to the Puerto Rico Sales Tax Financing Corporation zeros of 2054 as proof of Puerto Rico credits strengthening across the board.
The bonds were trading at 6.47% on Wednesday according to EMMA, down from the 6.65% they had been trading at on August 25.
