Prices of top-rated municipal bonds closed weaker on Tuesday, according to traders, as yields on some maturities increased by as much as five basis points. The primary was busy as several large deals came to market.
In the negotiated sector, the $2 billion New Jersey Economic Development Authority bond deal was priced for institutions while California's $2 billion bond sale was offered to retail investors. In the competitive arena, the Cobb-Marietta Coliseum and Exhibit Hall Authority sold $373 million of taxable bonds to help finance a new Atlanta Braves stadium.
Bank of America Merrill Lynch priced the New Jersey Economic Development Authority's $2.2 billion of bonds for institutions.
The bonds had a two-day retail order period as BAML priced the authority's $1.75 billion of tax-exempt school facilities construction bonds and refunding bonds, Series WW and XX, for retail on Friday and then repriced it on Monday.
The $500 million of Series 2015 WW school facilities construction bonds were priced for institutions to yield from 4.63% with a 4.625% coupon and a 5.25% coupon in a split 2028 maturity to 5.10% with a 5% coupon in 2037. A 2040 term bond was priced as 5 1/4s to yield 5.10%. The $1.25 billion of Series 2015 XX school facilities construction refunding bonds were priced to yield from 3.24% with a 5% coupon in 2019 to 4.59% with 4375%, 5% and 5.25% coupons in a triple split 2027 maturity.
The $454.86 million of Series 2015 YY and ZZ taxable school facilities construction refunding bonds were also priced.
The $401.86 million of Series YY taxables were priced at par to yield 3.375% in 2017 to 4.447% in 2020. The $53 million of ZZ taxables were priced at par to yield 3.802% in 2018.
The entire issue was rated A3 by Moody's Investors Service and A-minus by Standard and Poor's and Fitch Ratings.
Since 1995, the New Jersey EDA has issued roughly $41.65 billion of debt. The years of 2004 and 2005 saw the most issuance with $4.54 billion and $4.11 billion, respectively. The authority had low issuance years in 1995 and 2005, when they issued just $445 million and $414 million.
In the competitive arena, the Cobb-Marietta Coliseum and Exhibit Hall Authority, Ga., sold $376.6 million of Series 2015 taxable revenue bonds for the Atlanta Braves' new stadium.
Wells Fargo Securities won the issue with a true interest cost of 4.39%. The bonds were priced at par with a 1% coupon in 2017 and a 3.25% coupon in 2025; the bonds were also priced to yield from 3.40% with a 3.35% coupon in 2026 to 3.90% with a 3.85% coupon in 2030. A 2047 term bond was priced at par with a 4.5% coupon.
The 2017 maturity was 35 basis points above the comparable Treasury; the 2025 maturity was 100 basis points above the comparable Treasury; and the 2047 maturity was 167 basis points above the comparable Treasury. The deal was rated triple-A by Moody's, S&P and Fitch.
The bonds were issued by the authority through an agreement with Cobb County and the proceeds will be used as the county's contribution to a $672 million 41,500-seat Major League Baseball stadium.
Morgan Stanley offered the state of California's $1.9 billion of various purpose general obligation and GO refunding bonds to mom and pop investors ahead of the institutional pricing on Wednesday.
The $550 million of various purpose GO bonds were priced to yield from 0.61% with a 4% coupon in 2017 to 2.23% with a 5% coupon in 2024. A split 2045 term bond was priced as 4s and as 5s to yield 3.80% and 3.35%, respectively. A 2016 maturity was offered as a sealed bid.
The $1.35 billion of various purpose GO refunding bonds were priced to yield from 0.61% with 2% and 3% coupons in a split 2017 maturity to 3.14% with a 5% coupon in 2035. The 2016 maturity was offered as a sealed bid.
The deal was rated Aa3 by Moody's, AA-minus by S&P and A-plus by Fitch.
About $1.35 billion from the sale will be used to refinance existing debt, with the remaining amount providing permanent financing for capital facilities or other voter-approved projects and public facilities.
PRASA Deal Reportedly Off Table, for Now
The Puerto Rico Aqueduct & Sewer Authority has decided to delay issuing $750 million of revenue bonds due to uncertainty in the market, according to a published report.
The PRASA deal had been expected to price last week, but was pushed back and placed on the day-to-day new issue calendar.
There was "[s]ome dissension amongst investors over inclusion or lack thereof regarding level of covenant protections," a source told The Bond Buyer on Tuesday. "So some are pleased it was pulled, while others are upset."
On Monday, Government Affairs Secretary Jesús Manuel Ortiz told Caribbean Business "the process to achieve the issuance continues. We are confident that we can finalize it as soon as possible. We are, right now, working to close the transaction."
On Tuesday, however, Caribbean Business reported that PRASA executive president Alberto Lázaro told a local newspaper in Puerto Rico the deal was off the table for now. The report said he cited factors that included a plan deadline for the commonwealth's fiscal stability and economic development plan and a Puerto Rico Electric Power Authority (PREPA) restructuring plan, and the commonwealth's decision to ask the U.S. Supreme Court for a ruling to overturn a ban that prevents public agencies from restructuring.
Secondary Market
The yield on the 10-year benchmark muni general obligation on Tuesday was four basis points stronger at 2.13% from 2.09% on Monday, while the yield on the 30-year GO was five basis points stronger at 3.05% from 3.00%, according to the final read of Municipal Market Data's triple-A scale.
Treasury prices were lower on Tuesday, with the yield on the two-year Treasury note rising to 0.64% from 0.56% on Monday, while the 10-year yield rose to 2.12% from 2.02% and the 30-year yield increased to 2.85% from 2.75%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 100.0% versus 104.7% on Monday, while the 30-year muni to Treasury ratio stood at 106.9% compared to 110.4%, according to MMD.
Shelly Sigo and Christine Albano contributed to this column.
