While Chicago will delay its $380 million municipal bond market appearance until at least next week, traders are looking at the rest of this week's new issue supply, which kicks off on Tuesday.
Chicago had intended as soon as Tuesday to remarket $182 million of 2003 general obligation paper and $201 million of 2002 bonds, converting them from floating rate to fixed. Siebert Brandford Shank & Co. LLC is senior manager on the 2003 bonds that currently reset weekly and Ramirez & Co. Inc. is senior manager on the 2002 bonds that reset daily.
The city remains on track to remarket all $800 million of its floating-rate GOs as fixed-rate by mid-June, officials said.
The four floating-to-fixed conversions are aimed at reducing the city's risks tied to bank credit support and easing liquidity pressure on Chicago now that banks are in position to demand up to $2.2 billion in debt repayment due to termination and default events triggered by Moody's Investors Service's downgrade of the city to junk.
Moody's cut $8.9 billion of GOs, sales tax and motor fuel bonds to the speculative grade level of Ba1. Standard & Poor's and Fitch Ratings then both downgraded Chicago, though both maintain investment grade ratings, citing liquidity risks triggered by the Moody's downgrade.
Primary Market
In the primary, Barclays Capital on Tuesday priced for retail the New York City Municipal Water Finance Authority's $441.77 million of water and sewer system second general resolution revenue bonds, Fiscal 2015 Series HH.
The bonds were priced for retail to yield from 2.53% with a 4% coupon in 2025 to 3.65% with a 3.50% coupon in 2032; a 2037 split maturity was priced as 3 3/4s to yield 3.85% and as 5s to yield 3.48%; a 2038 maturity was priced as 4s to yield 3.85%. There were no retail orders taken for the 2039 maturity. The issue is rated Aa2 by Moody's and AA-plus by S&P and Fitch.
Also on Tuesday, Atlantic City, N.J., is expected to be in the market with a $41 million bond sale - but in a deal that is backed by a state enhancement program. S&P rated the deal A-minus based on the state's Municipal Qualified Bond Act program. The city's GO debt is rated Caa1 by Moody's, while S&P rates the city BB.
Bank of America Merrill Lynch is slated to price the Series 2015A taxable GO refunding bonds under the state's MQBA, which is intended to facilitate distressed municipal issuers' access to the capital markets.
Elsewhere on Tuesday, Barclays Capital is slated to price the Port Authority of New York and New Jersey's $500 million of consolidated bonds, 191st Series. The issue is rated Aa3 by Moody's and AA-minus by S&P and Fitch.
Also, Jefferies is expected to price Miami-Dade County, Fla.'s $481.79 million of Series 2015 water and sewer system revenue refunding bonds. The bonds are rated Aa3 by Moody's and A-plus by S&P and Fitch.
In the competitive arena on Tuesday, the Virginia Public Building Authority will sell $368.39 million of public facilities revenue bonds. The issue is comprised of $230.31 million of Series 2015A bonds and $138.08 million of Series 2015B refunding bonds. The issue is rated Aa1 by Moody's and AA-plus by S&P and Fitch.
The last time the Virginia PBA sold bonds competitively was on Aug. 27, 2014, when Wells Fargo Securities won $29.74 million of Series 2014B taxable public facilities revenue bonds with a true interest cost of 3.23%.
Topping the calendar this week is a $1 billion revenue bond issue from Florida's Citizens Property Insurance Corp. A retail order period is scheduled for Tuesday, which is preliminarily structured as $750 million of fixed-rate bonds with five, seven, and 10-year maturities, and $250-million in three-year floating rate notes. The institutional pricing is slated for Wednesday. The issue is rated A1 by Moody's, A-plus by S&P and AA-minus by Fitch.
Secondary Market
Treasury prices were lower on Tuesday as the yield on the two-year Treasury note rose to 0.60% from 0.57% on Monday, while the 10-year yield increased to 2.28% from 2.22% and the 30-year yield rose to 3.06% from 3.01%.
The yield on the 10-year benchmark muni general obligation on Monday rose three basis points to 2.28% from 2.25% on Friday, while the yield on the 30-year GO rose two basis points to 3.25% from 3.23%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated on Monday at 102.5% versus 105.2% on Friday, while the 30-year muni to Treasury ratio stood at 109.5% compared to 110.4%, according to MMD.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $1.53 billion to $15.935 billion on Tuesday. The total is comprised of $6.548 billion competitive sales and $9.387 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 38,084 trades on Monday on volume of $6.777 billion.
The most active bond, based on the number of trades, was the New Jersey Economic Development Authority's 2013 Series NN revenue refunding school facilities construction bond 5s of 2026, which traded 243 times at an average price of 105.816 with an average yield of 4.118%. The bonds were initially priced at 119.888.
Yvette Shields and Andrew Coen contributed to this report
