Municipal bond prices were weaker at midday as the big Barclays Center deal came to market on Tuesday.
Goldman Sachs priced the Brooklyn Area Local Development Corp.'s $483.45 million of Series 2016A tax-exempt and Series 2016B taxable bonds backed by payments in lieu of taxes.
The PILOTs will refund outstanding bonds from a 2009 issue that helped build the Barclays Center.
The issue was priced to yield 1.00% with a 5% coupon in 2017 and from 1.46% with a 5% coupon in 2020 to 3.10% with a 3% coupon in 2036. A 2042 term bond was priced as 5s to yield 3.00% while a 2043 term was priced as 3s to yield 3.15%.
The bonds are rated Baa3 by Moody's Investors Service and BBB-minus by S&P Global Rating, with the exceptions of the 2029, 2031-3026 and 2043 maturities totaling $112.01 million that are insured by Assured Guaranty Municipal.
Morgan Stanley released a pre-marketing scale for the New Jersey Healthcare Facilities Financing Authority's $243.38 million of Series 2016 revenue bonds for the St. Joseph's Healthcare System Obligated Group, according to market sources.
According to the pre-marketing scale, the issue was offered to yield from 1.12% with a 3% coupon in 2018 to 3.11% with a 5% coupon in 2036. A term bond in 2041 was offered as 5s to yield 3.13% and a term bond in 2048 was offered as 4s to yield 3.53%. The 2017 maturity was offered as a sealed bid.
The deal is rated Baa3 by Moody's and BBB-minus by S&P.
Also on Tuesday, Barclays Capital is set to price the Port of Tacoma, Wash.'s three series of bonds totaling $259.38 million. The deal consists of $150.66 million of Series 2016A non-AMT revenue refunding and Series 2016B AMT revenue and refunding bonds, rated Aa2 by Moody's and AA-minus by S&P. Barclays will also price the port's $108.72 million of Series 2016A non-AMT limited tax general obligation refunding bonds, rated Aa2 by Moody's and AA by S&P.
Ziegler is expected to price the Washington State Housing Finance Commission's $132.55 million of Series 2016 A&B non-profit housing revenue and refunding bonds for the Presbyterian Retirement Communities Northwest Project. The deal is rated BB-plus by Fitch Ratings.
Raymond James is expected to price New Haven, Conn.'s $117.57 million of Series 2016A GOs. The deal is rated Baa1 by Moody's and A-minus by S&P and Fitch.
Goldman is set to price the Irvine Ranch Water District, Calif.'s $117.51 million of Series 2016 certificates of participation. The deal is rated ripple-A by S&P and Fitch.
And Raymond James is expected to price Memphis, Tenn.'s $110 million of water, gas and electric system revenue bonds.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $1.66 billion to $11.57 billion on Tuesday. The total is comprised of $4.22 billion of competitive sales and $7.35 billion of negotiated deals.
Requests for New Muni CUSIPs Drop 30% in July
Demand for new municipal CUSIP identifiers plunged 30% in July, CUSIP Global Services said in a report released on Monday.
A total of 1,218 new municipal bond identifier requests were made in June, down from 1,754 in June, a drop driven largely by the fact that most states were just starting their new fiscal years. The results marked the end of five straight monthly increases in muni bond CUSIP requests and are the lowest monthly total since February when 1,137 identifiers were sought.
On a year-over-year basis, however, July municipal bond identifier requests were up by 1% at 9,632 versus 9,541 in 2015. In the seven months of this year, total municipal CUSIP orders totaled 11,123 up 1.8% from 10,924 in the first seven months of 2015.
The report tracks requests by issuers for bond identifiers as an early indicator of new volume and suggests a resurgence of municipal issuance in the next several weeks.
Long-term muni note CUSIP order volume totaled 82 in July compared to 107 requests in June. Short-term note muni CUSIP orders fell as 124 orders were processed, down from 176 in June.
"Recent issuance data suggest that capital markets activity is still solid, despite a lot of uncertainty" said Gerard Faulkner, Director of Operations for CUSIP Global Services. "Based on July's data, the second half of the year is off to a good start."
Regionally, municipal bond issuers in Texas led the way with muni CUSIP requests, with 1,211 so far in 2016. New York came in second with 960 and California was third with 734.
Secondary Market
The yield on the 10-year benchmark muni general obligation was as much as one basis point stronger from 1.40% on Monday, while the yield on the 30-year muni was as much as one basis point stronger from 2.13%, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were also weaker on Tuesday. The yield on the two-year Treasury rose to 0.74% from 0.72% on Monday, the 10-year Treasury yield gained to 1.58% from 1.55% and the yield on the 30-year Treasury bond increased to 2.29% from 2.28%.
On Monday, the 10-year muni to Treasury ratio was calculated at 90.45% compared to 92.5% on Friday, while the 30-year muni to Treasury ratio stood at 93.6% versus 95.3%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 30,045 trades on Monday on volume of $9.67 billion.
Ramirez Remains Bullish on Munis
Ramirez remains bullish on the municipal bond market "with now better ratios and still fair -- but still rich -- sector valuations on a one year basis," Peter Block, Managing Director at Samuel A. Ramirez & Co., says in a weekly market commentary.
"We think investors can earn an average of 63 basis points in rolldown return in the sweet spot of the curve -- six-years to 15-years -- at this time, which when added to carry (assuming 5% coupon), is substantially similar to longer bonds return, but without additional risk," Block wrote on Monday. "Roll returns in this part of the curve have consistently been the most favorable on a risk-adjusted basis over the past year."
