Prices of top-shelf municipal bonds finished lower on Tuesday, according to traders, with yields of some maturities falling by as much as three basis points.
And while Chicago delayed its $380 million municipal bond market appearance until at least next week, traders saw a lot new issue supply come to market.
Primary Market
In the primary, Barclays Capital priced the New York City Municipal Water Finance Authority's $452.17 million of water and sewer system second general resolution revenue bonds, Fiscal 2015 Series HH for institutions.
The bonds were priced to yield from 2.55% with 4% and 5% coupons in a split 2025 maturity to 3.68% with a 3.50% coupon in 2032; a 2037 split maturity was priced as 3 3/4s to yield 3.86% and as 5s to yield 3.60%; a 2038 maturity was priced as 4s to yield 3.85%; and a 2039 maturity was priced as 5s to yield 3.66%.
The issue is rated Aa2 by Moody's Investors Service and AA-plus by Standard & Poor's and Fitch Ratings.
Barclays also priced the Port Authority of New York and New Jersey's $250 million of taxable consolidated bonds, 191st Series. The bonds were priced at par to yield 4.823% in a 2045 bullet maturity. The issue is rated Aa3 by Moody's and AA-minus by S&P and Fitch.
Jefferies priced Miami-Dade County, Fla.'s $482.18 million of Series 2015 water and sewer system revenue refunding bonds. The bonds were priced to yield from 1.36% with a 5% coupon in 2018 to 3.11% with a 5% coupon in 2026. The deal is rated Aa3 by Moody's and A-plus by S&P and Fitch.
These bonds will be refunding portions of the 2007 bonds and 2008 C bonds, according to Frank Hinton, director of the division of bond administration, for Miami-Dade County.
"We initially issued bonds for the funding of projects," Hinton said. "The bonds are now reviewed for refunding opportunities and as long as the county's threshold of a 5% present-value savings is met, we will continue to come to market."
Hinton also said the county needs to do refundings to save a projected average of $3.4 million a year in debt service.
"The expected average annual savings is important for the next series of bonds," he said. "We are aware of the needs and costs and these refundings will help us differ some of those costs."
Since 1997, Miami-Dade County has issued roughly $19.97 billion of debt. The lowest years of issuance occurred in 2000 and 2001, when the county only sold $162 million and $69 million, respectively. The years that saw the most issuance were 2008 and 2010, when they went to market with $2.01 billion and $2.38 billion, respectively.
Miami-Dade County has been no stranger to the muni market so far in 2015, as they have come with six issues totaling $815.7 million, not including Tuesday's deal. Since 1997, they have been coming to market an average of 6.4 times per year.
Bank of America Merrill Lynch priced the Riverside County, Calif., Public Financing Authority's $325 million of Series 2015 capital facilities project lease revenue bonds. The issue was priced to yield from 1.06% with 2% and 4% coupons in a split 2017 maturity to 4.15% with a 4% coupon in 2035; a 2040 split term was priced as 4 1/8s to yield 4.390% and as 5 1/4s to yield 4% and a 2045 split term was priced as 4 1/4s to yield 4.37% and as 5 1/4s to yield 4.07%.The bonds are rated AA-minus by S&P and A-plus by Fitch.
In the competitive arena, the Virginia Public Building Authority will sell $368.39 million of public facilities revenue bonds. Wells Fargo Securities won the issue with a true interest cost of 3.05%. The bonds were priced to yield from 0.38% with a 5% coupon in 2016 to 3.79% with a 4% coupon in 2035. The bonds are rated Aa1 by Moody's and AA-plus by S&P and Fitch.
The last time the Virginia PBA sold bonds competitively was on Aug. 27, 2014, when Wells Fargo Securities won $29.74 million of Series 2014B taxable public facilities revenue bonds with a true interest cost of 3.23%.
No-Go in Chicago
Chicago had intended as soon as Tuesday to remarket $182 million of 2003 general obligation paper and $201 million of 2002 bonds, converting them from floating rate to fixed. Siebert Brandford Shank & Co. LLC is senior manager on the 2003 bonds that currently reset weekly and Ramirez & Co. Inc. is senior manager on the 2002 bonds that reset daily.
The city remains on track to remarket all $800 million of its floating-rate GOs as fixed-rate by mid-June, officials said.
The four floating-to-fixed conversions are aimed at reducing the city's risks tied to bank credit support and easing liquidity pressure on Chicago now that banks are in position to demand up to $2.2 billion in debt repayment due to termination and default events triggered by Moody's Investors Service's downgrade of the city to junk.
Moody's cut $8.9 billion of GOs, sales tax and motor fuel bonds to the speculative grade level of Ba1. Standard & Poor's and Fitch Ratings then both downgraded Chicago, though both maintain investment grade ratings, citing liquidity risks triggered by the Moody's downgrade.
Secondary Market
The yield on the 10-year benchmark muni general obligation on Tuesday finished up two basis points to 2.30% from 2.28% on Monday, while the yield on the 30-year GO rose three basis points to 3.28% from 3.25%, according to the final read of Municipal Market Data's triple-A scale.
Treasury prices were lower on Tuesday as the yield on the two-year Treasury note rose to 0.60% from 0.57% on Monday, while the 10-year yield increased to 2.27% from 2.22% and the 30-year yield rose to 3.04% from 3.01%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 101.8% versus 102.5% on Monday, while the 30-year muni to Treasury ratio stood at 108.0% compared to 109.5%, according to MMD.
