Muni Prices Finish Stronger as New Deals Come to Market

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Prices of top-rated municipal bonds closed stronger, traders said, as yields on some maturities fell by as much as four basis points.

In the primary, muni traders saw a second wave of new supply hit the market, with large deals from New York, Hawaii, Texas and Florida being priced.

 

Secondary Market

The yield on the 10-year benchmark muni general obligation on Wednesday declined by three basis points to 2.24% from 2.27% on Tuesday, while the yield on the 30-year GO dropped four basis points to 3.20% from 3.24%, according to the final read of Municipal Market Data's triple-A scale.

Treasury prices were mixed on Wednesday, with the yield on the two-year Treasury note rising to 0.70% from 0.68% on Tuesday, while the 10-year yield fell to 2.32% from 2.34% and the 30-year yield decreased to 3.04% from 3.08%.

The 10-year muni to Treasury ratio was calculated on Wednesday at 96.6% versus 96.9% on Tuesday, while the 30-year muni to Treasury ratio stood at 105.4% compared to 105.2%, according to MMD.

 

Primary Market

Morgan Stanley priced the New York State Dormitory Authority's $1.52 billion of Series 2015A New York State sales tax revenue bonds for institutions after a one-day retail order period.

The DASNY bonds were priced to yield from 0.17% with a 2% coupon in 2016 to 2.59% with a 5% coupon in 2027.

The issue was rated triple-A by Standard and Poor's and AA-Plus by Fitch Ratings.

Siebert Brandford Shank priced the New York Metropolitan Transportation Authority's $419.71 million of Series 2015C transportation revenue refunding bonds for retail investors. The $382.76 million of Subseries 2015C-1 fixed-rates were priced to yield from 2.79% with a 5% coupon in 2025 to 3.56% with a 5% coupon in 2035; the $36.96 million of Subseries 2015C-2 fix-rate mandatory tender bonds were priced as 4s to yield 1.76% in 2032 with a mandatory tender date of 2020. The issue was rated A1 by Moody's, AA-minus by S&P and A by Fitch. The one-day retail order period is being held ahead of the institutional pricing on Thursday.

Bank of America Merrill Lynch priced the city and county of Honolulu's $581.88 million of wastewater system revenue bonds, which consist of junior refunding bonds and senior refunding bonds. The senior bonds are rated Aa2 by Moody's Investors Service and AA-minus by S&P while the junior bonds are rated Aa3 by Moody's and AA-minus by S&P.

The $178.04 million of Senior Series 2015A bonds were priced to yield from 0.74% with 3% and 5% coupons in a split 2017 maturity to 3.26% with a 5% coupon in 2035. Term bonds in 2040 and 2045 were priced as 5s to yield 3.44% and 3.52%, respectively. The $281.25 million of Senior Series 2015B refunding bonds were priced to yield from 0.40% with a 3% coupon in 2016 to 3.87% with 3.75% coupon and 3.72% with a 4% coupon in a split 2036 maturity. The $122.59 million of Junior Series 2015A refunding bonds were priced to yield from 0.77% with a 4% coupon in 2017 to 3.72% with a 3.50% coupon in 2032.

Since 1995, the city and county of Honolulu has issued roughly $9.26 billion of debt. The years of 2005 and 2012 saw the most issuance with $921 million and $1.18 billion, respectively. Honolulu did not come to market at all in 1996, 2013 or 2014.

BAML also priced the Hillsborough County Aviation Authority's $322.18 million of 2015 Series A AMT revenue bonds, 2015 Series A subordinated AMT revenue bonds and Series B non-AMT subordinated revenue for the Tampa International Airport. The revenue bonds were rated Aa3 by Moody's, AA-minus by S&P and Kroll Bond Rating Agency and A-plus by Fitch while the subordinated revenue bonds were rated A1 by Moody's, A-plus by S&P and Kroll and A by Fitch.

The $148.44 million of Series A revenue bonds were priced as 5s to yield from 3.28% in 2027 to 3.76% in 2025. Term bonds in 2040 and 2044 were priced as 5s to yield 3.92% and 3.99%, respectively. The $19.62 million of Series A subordinated revenue bonds were priced as 5s to yield from 3.73% in 2031 to 3.91% in 2035; terms in 2040 and 2044 were priced as 5s to yield 4.06% and 4.13%, respectively. The $154.13 million of 2015 Series B subordinated revenue bonds were priced as 5s to yield from 3.39% in 2031 to 3.60% in 2035; terms in 2040 and 2044 were priced as 5s to yield 3.77% and 3.84%, respectively.

And BAML priced the Harris County Cultural Education Facilities Finance Corp., Texas' $300 million of Series 2015 revenue bonds for the Houston Methodist Hospital. The bonds were priced as 4s to yield 4.21% and as 5s to yield 3.89% in a split 2045 maturity. The bonds were rated AA by S&P.

 

 

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