Muni Prices Fall; NYC Issues Come to Market

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Prices of top-shelf municipal bonds finished lower for a second straight session, traders said, as yields on some maturities strengthened by as much as five basis points in secondary market trading.

New York City was in the primary market with separate negotiated and competitive deals totaling about $966 million.

Secondary Market

The yield on the 10-year benchmark muni general obligation rose by five basis points to 2.27% from 2.22% on Monday, while the yield on the 30-year GO increased five basis points to 3.24% from 3.19%, according to the final read of Municipal Market Data's triple-A scale. Trading was moderate, according to Interactive Data.

In the past two trading sessions, yields on 10-year and 30-year munis have both moved eight basis points higher.

Treasury prices were also lower on Tuesday as the yield on the two-year Treasury note increased to 0.65% from 0.64% on Monday, while the 10-year yield rose to 2.27% from 2.19% and the 30-year yield increased to 3.03% from 2.94%.

The 10-year muni to Treasury ratio was calculated on Tuesday at 100.3% versus 101.4% on Monday, while the 30-year muni to Treasury ratio stood at 107.3% compared with 108.2%, according to MMD.

Primary Market

JPMorgan priced and repriced New York City's $615.67 million of Fiscal 2015 Series F, Subseries F-1 and Fiscal 2015 Series 1 GOs for institutions on Tuesday following a two-day retail order period.

The $300 million of Series F Subseries F-1 tax-exempts were repriced as 3s to yield 0.77% in 2017 and as 3s and 5s to yield 1.24% in a split 2018 maturity; as 2s and 5s to yield 2.01% in 2021; as 4s and 5s to yield 2.54% in a split 2024 maturity and as 5s to yield 2.78% in 2026. The bonds were also priced to yield from 3.64% with a 3.5% coupon in 2033 to 3.82% with a 3.75% coupon in 2037.

The Series F bonds were initially priced as 3s and 5s to yield 1.23% in a split 2018 maturity and as 2s and 5s to yield 1.97% in a split 2021 maturity; as 4s and 5s to yield 2.49% in a split 2024 maturity and as 5s to yield 2.78% in 2026. The bonds were also priced to yield from 3.64% with a 3.5% coupon in 2033 to 3.82% with a 3.75% coupon in 2037. The 2017 maturity was offered as a sealed bid.

The $315.67 million of Series 1 tax-exempts were repriced to yield from 0.40% with a 2% coupon in 2016 to yield 2.56% with a 5% coupon in 2024.

The Series 1 tax-exempts were initially priced as 2s, 4s and as 5s to yield 1.27% in a triple split 2018 maturity and as 5s to yield 2.51% in 2024. The 2016 and 2017 maturities were offered as sealed bids.

JPMorgan priced the city's $50 million of Fiscal 1995 Series F Subseries F-2 tax-exempt bonds as a remarketing. The bonds were priced at par to yield 55 basis points above SIFMA in 2018, to yield 65 basis points above SIFMA in 2019 and to yield 70 basis points above SIFMA in 2020.

In the competitive arena on Tuesday, New York City offered two separate sales totaling $300 million.

Citi won the $200 million of Fiscal 2015 Subseries F-3 taxable GOs with a true interest cost of 3.99%. The issue was priced to yield from 3.40% with a 4% coupon to 4.13% at par in 2032. JPMorgan won the city's $100 million of Fiscal 2015 Subseries F-2 taxable GOs with a TIC of 2.72%. Pricing information was not available.

All of the city issues offered on Tuesday were rated Aa2 by Moody's Investors Service and AA by Standard & Poor's and Fitch Ratings.

Since 1995, the Big Apple has sold about $94 billion of general obligation bonds. The largest issuance occurred in 2004 and 2008 when the city sold $7.3 billion and $6.6 billion, respectively. The city issued the least in 1999 and 2009, selling $1.8 billion in each of those years.

Also on Tuesday, JPMorgan priced the New York State Housing Finance Agency's $59.84 million of Series 2015B affordable housing revenue bonds. The bonds were priced at par to yield from 0.35% in 2015 to 3.05% and 3.10% in a 2026 split maturity; a 2030 maturity was priced at par to yield 3.60%; a 2035 maturity was priced at par to yield 3.90%; a 2040 maturity was priced at par to yield 4.05%; a 2045 maturity was priced at par to yield 4.125%; and a 2050 maturity was priced at par to yield 4.25%. The bonds were rated Aa2 by Moody's.

Barclays Capital priced the Dutchess County, N.Y., Local Development Corp.'s $80.94 million of Series 2015A revenue bonds for Marist College. The bonds were priced as 5s to yield from 1.35% in 2018 to 3.68% in 2036; a 2040 term bond was priced as 5s to yield 3.79% and a 2045 term was priced as 5s to yield 3.86%. The issue was rated A2 by Moody's and A by Fitch.

Also in the competitive arena on Tuesday, the East Bay Municipal Utility District, Calif., sold two separate issues totaling $183.06 million. Both issues were rated Aa1 by Moody's triple-A by S&P and AA-plus by Fitch.

Wells Fargo Securities won the MUD's $110.72 million of Series 2015B water system revenue green bonds with a TIC of 3.72%. The issue was priced to yield from 2.11% with a 5% coupon in 2034 to 3.75% with a 4% coupon in 2040; a 2045 term bond was priced as 4s to yield 3.85%. Wells also won the MUD's $72.34 million of Series 2015B water system revenue green bonds with a TIC of 3.71%. The issue was priced to yield from 1.97% with a 5% coupon in 2023 to 3.65% with a 4% coupon in 2038; a 2045 term bond was priced as 4s to yield 3.85%

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