Prices of top quality municipal bonds were weaker at midday Wednesday traders said, as yields on some maturities were as much as two basis points higher.
After digesting a flood of new issuance that hit on Tuesday, the primary market is seeing two enormous deals being priced on Wednesday; Chicago’s O’Hare International Airport for institutions and the Port Authority of New York and New Jersey for retail.
Primary Market
The two megadeals have officially hit the market.
JP Morgan preliminary priced Chicago’s O’Hare International Airport’s $1.954 billion of general airport senior lien revenue and refunding bonds, which is broken down into four series.
The $429.39 million of alternative minimum tax, Series 2015A bonds were priced to yield 1.57% with a 5% coupon in 2019 and from 2.82% with a 5% coupon in 2023 to 4.54% with a 4.125% coupon in 2037. The 2016 maturity was offered as a sealed bid.
The $1.196 billion of non-AMT series 2015B bonds were priced as 5s to yield from 1.42% in 2019 to 3.80% in 2035. The 2016 maturity was offered as a sealed bid.
The $194.72 million of AMT Series 2015C bonds were priced to yield from 2.25% with a 5% coupon in 2021 to 4.10% with a 5% coupon in 2035. Term bonds in 2035 and 2046 were priced as 4.5s and 5s to yield 4.64% and 4.36%.
The $134.26 million of non-AMT Series 2015D bonds were priced to yield from 2.00% with a 5% coupon in 2021 to 4.15% with a 4% coupon in 2035. A term bond in 2040 was priced to yield 4.34% with a 4.20% coupon and a term bond in 2046 was priced to yield 4.06% with a 5% coupon in 2046.
The O’Hare deal is rated A by Standard and Poor’s, A-minus by Fitch Ratings and A-plus by Kroll Bond Rating Agency.
Wells Fargo Securities priced the Port Authority of New York and New Jersey’s roughly $2 billion of revenue bonds for retail investors on Wednesday.
The $305.195 million of AMT 193rd Series bonds were priced to yield from 0.73% with a 4% coupon in 2017 to 3.50% with a 5% coupon in 2035. No retail orders were taken for the 2028-2034 maturities. The 2016 maturity is offered as a sealed bid.
The $1.195 billion of non-AMT 194th Series bonds were priced to yield from 0.60% with a 4% coupon in 2017 to 3.18% with a 5% coupon in 2035. A term bond in 2045 was priced as 4s to yield 3.86%. No retail orders were taken for the 2028-2029, 2031-2034, 2040 and 2055 maturities.
There is also a taxable $500 million taxable portion to the deal.
Since 1995, the PANY/NJ has issued roughly $34.31 billion of debt. The years of 2012 and 2014 saw the most issuance with $3.69 billion and $2.88 billion, respectively. The consecutive years of 1999 and 2000 saw the lowest issuance with $400 million and $500 million, respectively.
Wells Fargo Securities priced the California Infrastructure and Economic Development’s $349 million of tax-exempt fixed rate and floating rate notes for the Academy of Motion Picture Arts and Sciences. No information was immediately available.
Elsewhere in the Golden State, the city and county of San Francisco sold $127.98 million of refunding certificates of participation, Series 2015-R1 on Wednesday. Barclays Capital won the bidding war with a true interest cost of 3.54%. The COPs were priced to yield from 0.22% with a 5% coupon in 2016 to 3.79% with a 4% coupon in 2040. The deal is rated Aa3 by Moody’s, AA by S&P and AA-minus by Fitch.
Secondary Trading
Treasury prices were mixed midday Wednesday, with the yield on the two-year Treasury rising to 0.62% from 0.61% from Tuesday, while the 10-year yield increased to 2.07% from 2.06% and the 30-year yield decreased to 2.89% from 2.90%.
The yield on the 10-year benchmark muni general obligation opened Wednesday morning as much as one basis point higher from 2.01% at Tuesday’s close, while the 30-year GO rose by as much as two basis points from 3.05%, according to an early morning read of the Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated on Tuesday at 98.8% versus 97.6% on Monday, while the 30-year muni to Treasury ratio stood at 106.5% compared to 105.1%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 36,838 trades on Tuesday on volume of $7.234 billion.
