Prices of top-quality municipal bonds finished steady to weaker on Tuesday, as two green bond offerings came to market along with a big a competitive sale from the Nutmeg State.
Leading off the negotiated slate was the $939.320 million of green bond sale from Sound Transit, the Central Puget Sound Regional Transit Authority, Wash.
The issue consisted of $789.32 million of Series 2015S-1 green bonds sales tax improvement and refunding bonds and $150 million of Series 2015S-2 A and B green bond floating-rate notes.
"We are very pleased with the sale and were oversubscribed on the fixed-rate portion of the deal," said Brian McCartan, executive director of finance and information technology for Sound Transit. "We were testing the waters as far as the amount for the FRNs and $150 million ended up being the sweet spot. We are very happy with the results of both series."
JPMorgan priced and re-priced the Series 2015S-1 green bonds as 5s to yield 1.00% in 2018, and from 2.30% in 2024 to 2.69% in 2027 and from 2.88% in 2029 to 3.24% in 2036. A 2045 term bond was priced as 5s to yield 3.43% and a term bond in 2040 was priced as 4s to yield 3.76%. A term split maturity bond in 2050 was priced as 4s to yield 4.05% and as 5s to yield 3.58%.
The $75 million of Series 2015S-2A FRNs were priced at par to yield 70 basis points above the SIFMA rate in 2045; it has a mandatory put date of Nov. 1, 2018. The $75 million of Series 2015S-2B FRNs were priced at par to yield 70 basis points above the SIFMA rate in 2045 and has the same mandatory put date.
The issue was rated Aa2 by Moody's Investors Service and triple-A by Standard & Poor's.
McCartan also said that most maturities were one to three times oversubscribed and that the 2026 maturity was almost five times oversubscribed.
The refunding par amount portion ended up being $387.6 million and Sound Transit got roughly $30.1 million, or 7.6%, in present value savings.
Citigroup priced the New York State Environmental Facilities Corp.'s $367.69 million of Series 2015D tax-exempt state revolving funds revenue bonds, green bonds, under the 2010 Master Financing Program.
The issue was priced to yield from 0.16% with a 5% coupon and 0.27% with a 2% coupon in a split 2016 maturity to 3.50% with a 3.25% coupon in 2037. The bonds were rated triple-A by Moody's, S&P and Fitch Ratings.
Since 1995, the NYS EFC has issued roughly $16.3 billion of debt. The years of 2002 and 2004 saw the most issuance with $2.62 billion and $1.32 billion, respectively. The NYS EFC saw low years of issuance in 1995 and 1999, when they sold $240 million and $205 million, respectively.
Later this week, Morgan Stanley will be pricing a green bond issue as part of a larger sale of $159.05 million of system enterprise revenue bonds for Colorado State University. The Board of Governors of the Colorado State University System will offer $46.13 million of Series 2015E-2 green bonds on Wednesday and Thursday. Also being priced by Morgan Stanley are $96.5 million of Series 2015E-1 and $16.42 million of Series 2015F bonds.
On Tuesday, Wells Fargo Securities priced the Philadelphia Gas Works' $261.79 million of 13th Series 1998 general ordinance revenue refunding bonds. The issue was priced to yield from 0.60% with a 3% coupon in 2016 to 3.75% with a 5% coupon in 2034. The bonds were rated Baa1 by Moody's, A-minus by S&P and BBB-plus by Fitch.
In the competitive arena, the state of Connecticut sold two separate issues of general obligation bonds totaling $500 million.
Wells Fargo Securities won the Nutmeg State's $250 million of Series 2015E tax-exempt GOs with a true interest cost of 3.17%. The issue was priced as 5s to yield from 0.28% in 2016 to 1.32% in 2019; and from 2.64% with a 5% coupon in in 2025 to 3.75% with a 4% coupon in 2035. Raymond James won the state's $250 million of Series 2015B taxable GOs with a TIC of 2.73%. The issue was priced to yield from 0.60% with a 2% coupon in 2016 to 3.33% at par in 2025.
Both sales were rated Aa3 by Moody's and AA by S&P and Fitch.
Secondary Market
The yield on the 10-year benchmark muni general obligation on Tuesday finished up two basis points to 2.21% from 2.19% on Monday, while the yield on the 30-year GO ended steady at 3.10%, 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 0.72% from 0.66% on Monday, while the 10-year yield rose to 2.21% from 2.15% and the 30-year yield increased to 2.89% from 2.85%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 100.1% versus 102.0% on Monday, while the 30-year muni to Treasury ratio stood at 107.5% compared to 108.8%, according to MMD.
