Top-rated municipal bonds finished slightly stronger on Tuesday, according to traders who saw a wide array of new deals hit the marketplace.
The bulk of the week's more than $9 billion of new supply was priced or sold, led off by deals from issuers in New York, Texas and Washington state.
The New York City Transitional Finance Authority led the pack with three sales totaling $1 billion.
Bank of America Merrill Lynch priced the TFA's $750 million of Fiscal 2016 Series E-1 future tax secured subordinate bonds for institutions on Tuesday after completing a two-day retail order period for the debt.
BAML priced the bonds to yield from 0.56% with a 4% coupon in 2018 to 2.93% with a 5% coupon and 3.23% with a 4% coupon in a split 2042 maturity. For retail, BAML priced the issue to yield from 0.71% with a 3% coupon in 2019 to 2.93% with a 5% coupon in 2042; the 2018 maturity was offered as a sealed bid.
Additionally, the TFA competitively sold $250 million of taxable fixed-rate new money bonds in two sales. Jefferies won the $196.32 million of Fiscal 2016 Series E-2 future tax secured subordinate bonds with a true interest cost of 2.32%. The issue was priced to yield from 0.95% with a 1% coupon in 2018 to 2.80% at par in 2026. FTN Financial Capital won the $53.68 million of Fiscal 2016 Series E-3 future tax secured subordinate bonds with a TIC of 2.999%. Pricing information was not available.
All deals are rated Aa1 by Moody's Investors Service and triple-A by Standard & Poor's and Fitch Ratings.
Wells Fargo Securities priced the city of Houston's $955.11 million of Series 2016B combined utility system first lien revenue and refunding bonds.
The issue was priced to yield from 0.34% with a 3% coupon in 2016 to 3.30% with a 4% coupon in 2040; a 2045 term bond was priced as 4s to yield 3.38%. The offering, which was upsized from $800 million, is rated Aa2 by Moody's and AA by Fitch.
Since 2006, Space City has issued bonds an average of 5.4 times a year. Houston has sold about $13 billion of debt in the past 10 years, with the largest issuances coming in 2011 and 2014 when it offered $2.1 billion and $2.5 billion, respectively, and hitting the lows in 2006 and 2015, when it issued $319 million and $485 million, respectively.
Washington state competitively sold two deals totaling $522.11 million. Barclays Capital won the $321.58 million of Series 2016C various purpose GOs with a TIC of 3.22%. The issue was priced as 5s to yield from 0.38% in 2017 to 2.88% in 2041. Citigroup won the $200.53 million of Series 2016D motor vehicle tax GOs with a TIC of 3.22%. The issue was priced as 5s to yield from 0.39% in 2017 to 2.90% in 2041. Both sales are rated Aa1 by Moody's and AA-plus by S&P and Fitch.
Minnesota competitively sold two deals totaling $350.75 million. Morgan Stanley won the $247.43 million of Series 2016A state revolving fund revenue bonds with a TIC of 2.69%. The issue was priced as 5s to yield from 0.40% in 2017 to 2.50% in 2036. BAML won the $103.35 million of Series 2016B state revolving fund revenue refunding bonds with a TIC of 1.61%. The issue was priced to yield from 1% with a 3% coupon in 2021 to 1.93% with a 5% coupon in 2028. The bonds are rated triple-A by Moody's, S&P and Fitch.
The Dallas Independent School District competitively sold $304.98 million of Series 2016A unlimited tax school building bonds. BAML won the deal with a TIC of 2.77%. The issue was priced to yield from 1.10% with a 5% coupon in 2022 to 3.12% with a 3% coupon in 2036. The offering, which is backed by the Permanent School Funding guarantee program, is rated triple-A by Moody's, S&P and Fitch.
Clark County, Nev., competitively sold $283.73 million of Series 2016A limited tax GO bond bank refunding bonds, additionally secured by pledged revenues. Citi won the deal with a TIC of 1.64%. The issue was priced as 5s to yield from 0.32% in 2016 to 2.17% in 2029. The issue is rated Aa1 by Moody's and AA by S&P.
Back in the negotiated sector, BAML priced the state of Ohio's $233.35 million of Series 2016A hospital revenue bonds for the University Hospitals Health System. The issue was priced to yield from 2.43% with a 5% coupon in 2027 to 3.15% with a 5% coupon in 2036; a 2041 maturity was priced as 5s to yield 3.41% while a split 2046 maturity was priced at par to yield 4% and as 5s to yield 3.46%. The deal is rated A2 by Moody's and A by S&P.
Goldman Sachs priced the Missouri Joint Municipal Electric Utility Commission's $242.55 million of Series 2016A power project revenue refunding bonds for the Prairie State Project. The issue was priced to yield from 3.16% with a 4% coupon in 2032 to 3.08% with a 5% coupon in 2037; a 2040 maturity was priced as 5s to yield 3.24% and a 2041 maturity was priced as 4s to yield 3.61%. The bonds are rated A2 by Moody's and A by Fitch.
Citi priced the Guam Waterworks Authority's $143.31 million of Series 2016 water and wastewater revenue bonds. The issue was priced as 5s to yield from 1.53% in 2020 to 3.23% in 2031; a 2036 maturity was priced as 5s to yield 3.32% and a 2046 maturity was priced as 5s to yield 3.64%. The deal was rated Baa2 by Moody's, A-minus by S&P and triple-B-minus by Fitch.
Secondary Market
The yield on the 10-year benchmark muni general obligation closed down one basis point at 1.61% from 1.62% on Monday, while the 30-year muni yield fell one basis point to 2.68% from 2.69%, according to the final read of Municipal Market Data's triple-A scale.
Treasuries were narrowly mixed on Tuesday. The yield on the two-year Treasury rose to 0.68% from 0.66% on Monday, while the 10-year Treasury yield slipped to 1.72% from 1.73% and the 30-year Treasury bond yield declined to 2.55% from 2.56%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 93.2% compared to 93.5% on Monday, while the 30-year muni to Treasury ratio stood at 104.9% versus 105.1%, according to MMD.
