Traders pounced on deals in the primary on Tuesday, leading to aggressive pricing and oversubscription across the market. The city of Chicago's pricing on its second lien wastewater transmission revenue project bonds is likely to be further bumped in a probable repricing later Tuesday, said a New York based trader.
From its initial pricing, the deal was already "too expensive" for one Midwest trader at an 85 basis point spread, a slim margin for a deal rated A3 by Moody's Investors Service and AA-minus by Standard & Poor's.
Pricing is expect to tighten even further, as the deal quickly became three times oversubscribed Tuesday morning, the New York based trader said. A repricing is expected, particularly in the 2034 to 2039 maturity range where demand has been the most intense, said the trader.
The morning's other offerings have priced successfully as well, traders agreed.
The largest deal of the week, the San Francisco Airport issue, was repriced after getting significant demand on its three term bonds, according to data provided by Ipreo. The $475 million negotiated deal was priced to yield from 3.32% on a 5% coupon in 2039 to 3.91% on a 5% coupon in 2044, according to Ipreo. The deal is rated A1 by Moody's and A-plus by Standard & Poor's and Fitch Ratings.
The Prince George County, Md., priced tight to municipal triple-A scales, with the general obligation consolidated public improvement bonds priced to yield from 0.16% on a 2% coupon in 2015 to 3.35% on a 4% coupon in 2034, according to data provided by Ipreo.
Because the deal carries a triple-A ratings from the three major rating agencies, this is the one to potentially impact municipal scales the most, traders agreed.
The city of Augusta's water and sewerage revenue refunding and improvement bonds also placed successfully Tuesday morning. Citigroup Global Markets won the bid. The bonds were priced to yield from 0.20% on a 3% coupon in 2015 to 3.52% on a 4.50% coupon in 2039, according to Ipreo.
At last read at 9:49 a.m., the Municipal Market Data's triple-A 5% scale was relatively unchanged, according to data provided by TM3. Bonds maturing from 2015 through 2019 and 2030 through 2044 held steady as bond maturing between 2020 and 2029 tightened up to a basis point. Traders expected the intense demand in the market place to further tighten scales as the day progressed.
