Munis Steady as N.J. Turnpike, NYC Housing Price

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Top shelf municipal bonds finished unchanged on Wednesday, according to traders, as more supply hit the market on Wednesday, topped by a deal from New Jersey Turnpike Authority and a housing sale from New York City.

Goldman Sachs priced and repriced the New Jersey Turnpike Authority's $600 million of Series 2017A turnpike revenue bonds on Wednesday. The deal was increased from the original issue size of $575 million and yields were lowered one to three basis points.

The bonds were repriced to yield from 2.63% with a 5% coupon in 2027 to 3.72% with a 3.5% coupon in 2036.

"I am not surprised it was bumped," said one New York trader. "Muni demand is strong right now and supply light, especially for any deal with some spread. It's a revenue bond which is isolated to a certain degree from the general state's problems."

The deal is rated A2 by Moody's Investors Service, A-plus by S&P Global Ratings and A by Fitch Ratings.

Since 2009, the authority has sold about $10.2 billion of bonds, with the most issuance occurring in 2009 when it offered $2.49 billion of debt. The turnpike authority didn't come to market in 2011.

"Although there may be some taint from the state's problems, I view it to be minimal," said Alan Schankel, managing director at Janney Capital Markets. "The revenue nature of the issuer attracts investors seeking New Jersey exposure without the increasing risk attached to the state's tax backed general fund debt."

JPMorgan Securities priced the New York City Housing Development Corp.'s $122.94 million of Series 2017 A-1-A multi-family sustainable neighborhood housing bonds.

The $51.61 million of Series 2017 A-1-A bonds were priced at par to yield from 1.45% and 1.50% in a split 2020 maturity to 2.95% in a split 2028 maturity and to yield 3.50% in 2032, 3.80% in 2037, 3.85% in 2042, 3.95% in 2047 and 4.05% in 2052.

The $11.17 million of Series 2017 A-1-B bonds were priced at par to yield 3.80% in 2037, 3.85% in 2042, 3.95% in 2047 and 4.05% in 2052.

The $48.88 million of Series 2017 A-2-A bonds were priced at par to yield 1.90% in 2021.

The $11.29 million of Series 2017 A-2-B bonds were priced at par to yield 1.90% in 2021.

The deal is rated Aa2 by Moody's and AA-plus by S&P.

Late Tuesday, Wells Fargo Securities priced the NYC HDC's $24.5 million of taxable Series 2017 B-1 multi-family housing revenue bonds.

The issue was priced at par to yield from 1.60% in 2018 to 3.814% in 2029. The deal is also rated Aa2 by Moody's and AA-plus by S&P.

RBC Capital Markets priced the Glendale Community College District, Calif.'s $122 million of Series A election of 2016 general obligation bonds.

The issue was priced to yield from 0.93% with a 4% coupon in 2018 to 3.15% with a 5% coupon in 2037; a 2041 maturity was priced as 5 1/4s to yield 3.09% and a 2046 maturity was priced as 4s to yield 3.72%. The deal is rated Aa2 by Moody's and AA-minus by S&P.

Bank of America Merrill Lynch priced the El Paso County Hospital District, Texas' $106.8 million of Series 2017 GO refunding bonds.

The issue was priced as 5s to yield 1.05% in 2017 and to yield from 1.59% with a 5% coupon in 2019 to about 4.18% with a 4% coupon in 2038. The deal is rated A2 by Moody's, A-minus by S&P and AA-minus by Fitch.

In the competitive arena on Wednesday, Anne Arundel County, Md., sold $237.75 million of bonds in two separate sales.

BAML won the $173.14 million of Series 2017 consolidated general improvements GOs with a true interest cost of 3.47%. The bonds were priced as 5s to yield from 0.83% in 2017 to 3.02% in 2040 and to yield 3.05% in 2043 and 3.08% in 2046.

Citigroup won the $64.61 million of Series 2017 consolidated general improvements refunding GOs with a TIC of 2.42%. Both deals are rated Aa1 by Moody's and triple-A by S&P.

 

Secondary Market

The yield on the 10-year benchmark muni general obligation was unchanged from 2.23% on Tuesday, while the 30-year GO yield was steady at 3.01%, according to the final read of Municipal Market Data's triple-A scale.

U.S. Treasuries were stronger on Wednesday. The yield on the two-year declined to 1.28% from 1.30% on Tuesday, while the 10-year Treasury yield dropped to 2.39% from 2.42%, and the yield on the 30-year Treasury bond decreased to 2.99% from 3.02%.

The 10-year muni to Treasury ratio was calculated at 93.5% on Wednesday compared with 92.5% on Tuesday, while the 30-year muni to Treasury ratio stood at 100.6%, versus 99.8%, according to MMD.

 

MSRB: Previous Session's Activity

The Municipal Securities Rulemaking Board reported 43,687 trades on Tuesday on volume of $11.57 billion.

 

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