Texas, N.Y., Va. Transportation Deals Roll into Muni Market

bb050516mun.jpg
bb050516mun.jpg

Top-quality municipal bonds finished steady to stronger on Wednesday, according to traders, as three big transportation deals totaling over $2 billion came to market.

JPMorgan priced the North Texas Tollway Authority's $993.24 million of Series 2016A system first-tier revenue refunding bonds, with yields lowered from two to 13 basis points at repricing.

"We are extremely pleased with the transaction," Horatio Porter, NTTA's chief financial officer, told The Bond Buyer. "We did a significant amount of pre-marketing, including an internet roadshow and meeting with individual investors. We believe those efforts further broadened our investor base and it certainly didn't hurt that we were the headline deal this week."

The issue was repriced as 5s to yield from 0.67% in 2017 to 2.78% in 2036; a 2039 maturity was priced as 4s to yield 3.13% while a 2039 term bond was priced as 5s to yield 2.85%.

Porter said the overall the deal was nine times oversubscribed and added that although they knew with their reputable name and strong credit that the deal would go well, he admitted they were pleasantly surprised with how much demand there was for the bonds.

"Timing is everything. We were supposed to price at the end of the month, but we moved it up, as it was a great opportunity to take advantage of optimal market conditions," Porter said.

The deal is rated A1 by Moody's Investors Service and A by Standard & Poor's. Both rating agencies give the credit a stable outlook.

Porter said the sale generated about $220 million, or 20%, in present-value savings.

"We went into the deal cautiously optimistic, but we didn't expect to achieve these types of results. The savings in this transaction alone almost outpaced the four transactions we did in 2014-2015," he said.

Citi priced the New York State Thruway Authority's $850 million of Series 2016A general revenue junior indebtedness obligations.

The issue was repriced to yield from 1.13% with a 3% coupon in 2021 to 3.06% with a 4% coupon in 2038; a 2041 maturity was priced as 5s to yield 2.91%, a 2046 maturity was priced as 5s to yield 2.97%, a split 2051 maturity was priced as 5s to yield 3.06% and as 4s to yield 3.37% and a split 2056 maturity was priced as 4s to yield 3.49% and as 5 1/4s to yield 3.07%.

The deal is rated A3 by Moody's and A-minus by S&P.

Proceeds of the sale are being used to fund part of the Tappan Zee Bridge replacement project, as well as various other expenses.

The Virginia Transportation Board competitively sold $275.99 million of Series 2016 transportation capital projects revenue bonds.

Bank of America Merrill Lynch won the deal with a true interest cost of 2.77%. The issue was priced to yield from 0.62% with a 5% coupon in 2017 to 3.23% with a 3% coupon in 2041.

The deal is rated Aa1 by Moody's and AA-plus by S&P and Fitch Ratings.

The VTB had previously sold comparable bonds competitively on Nov. 19, 2014, when JPMorgan won $274.98 million of Series 2014 capital projects revenue bonds with a true interest cost of 3.38%.

On Thursday, Ramirez is slated to price the Port Authority of New York and New Jersey's $475 million of 195th series of consolidated bonds. The deal, which is subject to the alternative minimum tax, is rated Aa3 by Moody's and expected to be rated AA-minus by S&P and Fitch.

Since 2006, Port Authority has issued $23.2 billion of debt, with over $2 billion of bonds sold in 2007, 2010, 2012, 2014 and 2015. The smallest issuance year was 2008, when the authority sold $1.6 billion.

 

Secondary Market

The yield on the 10-year benchmark muni general obligation was unchanged from 1.58% on Tuesday, while the 30-year muni yield dropped one basis point to 2.53% from 2.54%, according to the final read of Municipal Market Data's triple-A scale.

U.S. Treasuries were narrowly mixed on Wednesday. The yield on the two-year Treasury was unchanged from 0.75% on Monday, while the 10-year Treasury yield slipped to 1.79% from 1.80% and the yield on the 30-year Treasury bond was flat at 2.66%.

The 10-year muni to Treasury ratio was calculated at 88.6% on Wednesday compared with 87.9% on Tuesday, while the 30-year muni to Treasury ratio stood at 95.7% versus 95.5%, according to MMD.

For reprint and licensing requests for this article, click here.
MORE FROM BOND BUYER