The last of the big pre-holiday new issue supply hit the municipal bond market on Thursday, with the state of Connecticut leading the pack.
The Nutmeg State sold more than $500 million of general obligation bonds, some of which are "green bonds" designed to fund different clean water projects across the state.
J.P. Morgan Securities priced $550 million Connecticut GOs in three series.
The $60 million Series G bonds are the green bonds and they will fund the design, construction and improvement of wastewater treatment plants aimed at reducing water pollution. The bonds were priced to yield from 2.89% with a 5% coupon in 2028 to 3.04% with a 5% coupon in 2031.
The proceeds from the $240 million Series F bonds will be used to fund various capital projects, including local school construction. The bonds were priced to yield from 1.06% in 2018 with a 2% coupon to 3.59% with a 4% coupon in 2034. The 2015-17 maturities were offered as sealed bids.
The $259.435 million Series H bonds were priced to yield from 1.06% with a 5% coupon in 2018 to 2.74% with a 5% coupon in 2025. The 2016-17 maturities were offered as sealed bids. The proceeds will be used to refund some of state's outstanding GO debt.
The issue is rated AA3 by Moody's Investors Service and AA by Standard & Poor's, Fitch Ratings and Kroll Bond Rating Agency.
Primary
Also on Thursday, Citigroup Global Markets won the competitive bidding for Louisiana's $199.99 million of general obligation bonds with a true interest cost of 3.0317%. The bonds were sold in two series: $160.09 million Series 2014-D-1, which were priced as serials to yield from 0.14% with a 5% coupon in 2015 to 3.41% with a 4% coupon in 2034; and $39.9 million Series 2014-D-2, which were priced as serials to yield from 0.14% with 5% coupon in 2014 to 3.41% with a 4% coupon in 2034. The issue is rated Aa2 by Moody's and AA by both S&P and Fitch.
Barclays Capital won the Clark County, Nev., $100 million of limited tax general obligation flood control bonds with a TIC of 3.4890%. The issue is additionally secured with pledged revenues. The bonds were priced as serials to yield from 0.71% with a 5% coupon in 2017 to 3.72% with a 4% coupon in 2038. The issue is rated Aa1 by Moody's and AA by S&P.
Bank of America Merrill Lynch priced the city and county of Honolulu's $102.005 million water system revenue bonds. The bonds were priced to yield from 2.32% with a 5% coupon in 2023 to 3.56% with a 4% coupon in 2036. The issue is rated Aa2 by Moody's and AA-plus by Fitch.
Secondary
Municipal bond yields are mostly lower at mid-session, with the benchmark 10-year GO off two to four basis points and 30-year GO off one to three basis points, according to the recent read of Municipal Market Data's triple-A scale.
"The intermediate range continued to lead the muni secondary," according to MMD Senior Market Analyst Randy Smolik. "Stronger Treasuries prompted the buying as they react to weaker PMI data from Europe and China and a large book for the Alibaba corporate sale."
Treasury prices are higher with the two-year note yield down 15 basis points at 0.38% from Wednesday's market close. The 10-year's yield lost 11 basis points to 2.25% and the 30-year fell six basis points to 3.00%.
On Wednesday, the muni to Treasury ratio declined. The 10-year muni to Treasury ratio closed lower at 92.8% (from 94.8% on Tuesday and 93.6% on Monday) and the 30-year muni to Treasury ratio closed lower at 101.1% (from 101.6% on Tuesday and from 101% on Monday).
"As the week's hefty municipal new issue slate winds down, munis are recovering some of the ground lost in recent days," Janney Capital Markets says in its latest fixed-income strategy and research report. "The Investment Company Institute reported municipal mutual funds inflows of $893 million last week, the 18th week of positive flows, which brings total 2014 inflows to $22 billion."
Equities turned around and are trading up. The Dow Jones Industrial Average is up about five points, the S&P 500 is around three points higher and the NASDAQ is nearly 20 points higher.
