Top quality municipal bonds were stronger at midday, according to traders, as the last of the week’s big new issues were priced.
Hawaii was in the market for the second time this month, after selling $525 million of general obligation bonds on March 15 in its first competitive sale in over 25 years.
On Thursday, Bank of America Merrill Lynch priced the Aloha State’s $307.27 million of GO refunding bonds for institutions after a one-day retail order period.
The $5.3 million of tax-exempt Series FD bonds were offered as a sealed bid maturing in 2016. The $182.38 million of tax-exempt Series FE bonds were priced to yield from 1.05% with a 5% coupon in 2019 to 2.20% with 4% and 5% coupons in a split 2028 maturity. The $119.59 million of taxable Series FF bonds were priced at par to yield from about 30 basis points over the comparable Treasury security in 2019 to approximately 115 basis points over the comparable Treasury security in 2028.
The bonds are rated Aa2 by Moody’s Investors Service and AA by Standard & Poor’s and Fitch Ratings.
BAML received the written award on the Pennsylvania Higher Educational Facilities Authority’s $169.64 million of Series 2016A refunding revenue bonds for the Trustees of the University of Pennsylvania. The issue was priced to yield from 0.61% with a 5% coupon in 2017 to 2.93% with a 4% coupon in 2036. A 2041 maturity was priced as a step coupon bond at par to yield 2.25% with an optional call in 2021. The deal is rated Aa1 by Moody’s and AA-plus by S&P.
Since 2006, the Pennsylvania HEFA has sold about $7.8 billion of bonds. The most issuance occurred in 2015 when the authority sold $1.40 billion of debt and it sold least amount in 2013 when it offered about $213 million of bonds.
Citigroup priced Westchester County, N.Y.’s $110.03 million of Series 2016A GO refunding bonds. The issue was priced to yield from 0.35% with a 2% coupon in 2016 to 2.07% with a 5% coupon in 2029. The bonds are rated Aa1 by Moody’s and triple-A by S&P and Fitch.
In the competitive arena, the Long Beach Unified School District, Calif., sold $145.25 million of Series 2016 general obligation refunding bonds.
Citi won the deal with a true interest cost of 2.27%. The issue was priced to yield from 0.50% with a 5% coupon in 2016 to 3% at par in 2033. The deal is rated Aa2 by Moody’s and AA-minus by S&P.
The district last competitively sold comparable bonds on Feb. 3, 2015, when Citigroup won $180 million of Election of 2008 Series D GOs with a TIC of 3.59%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar fell $2.17 billion to $6.07 billion on Thursday. The total is comprised of $1.92 billion of competitive sales and $4.15 billion of negotiated deals.
Secondary Market
The yield on the 10-year benchmark muni general obligation was two to four basis points weaker from 1.75% on Wednesday, while the 30-year muni yield was one to three basis points weaker from 2.72%, according to a read of Municipal Market Data's triple-A scale. U.S. Treasuries were stronger on Thursday. The yield on the two-year Treasury dropped to 0.74%, from 0.76% on Wednesday, while the 10-year Treasury yield declined to 1.80% from 1.83% and the 30-year Treasury bond yield decreased to 2.62% from 2.66%.
The 10-year muni to Treasury ratio was calculated on Wednesday at 95.7% compared with 98.2% on Tuesday, while the 30-year muni to Treasury ratio stood at 102.5% versus 104.7%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 41,892 trades on Wednesday on volume of $19.55 billion.
