Top-shelf municipal bonds were a tick weaker around midday, as yields on most maturities were as many as three basis points higher, according to traders, who were seeing a few more large deals price from issuers in Colorado, Georgia and California.
A pre-marketing scale has also been released for the tax-exempt portion of the Chicago deal.
Primary Market
RBC Capital Markets priced the city and county of Denver, Colo., School District No. 1's $466.095 million of GO bonds on Wednesday. The bonds were priced to yield from 1.25% with a 5% coupon in 2019 to 3.01% with a 5% coupon in 2038. A term bond in 2041 was priced to yield 3.42% with a 4% coupon. The deal is insured by the Colorado State Intercept Program and rated Aa2 by Moody's Investors Service, AA by S&P Global Ratings and AA-plus by Fitch Ratings.
In the competitive arena on Wednesday, the city and county of San Francisco sold $174.11 million of GO public health and safety bonds. Raymond James won the bidding with a true interest cost of 2.99%. No pricing information was immediately available. The deal is rated Aa1 by Moody's and AA-plus by S&P and Fitch.
Also, Fulton County, Ga. sold $104.785 million of GO library bonds. Wells Fargo won the bidding with a TIC of 3.51%. The bonds were priced to yield from 0.93% with a 5% coupon in 2017 to 3.40% with a 4% coupon in 2044. The deal is rated Aa1 by Moody's, AA-plus by S&P and AA by Fitch.
JPMorgan priced the Lone Star College System's $129.86 million of limited tax general GO bonds for Harris, Montgomery and San Jacinto counties in Texas. The bonds were priced to yield from 1.24% with a 5% coupon in 2019 to 3.08% with a 5% coupon in 2038. A term bond in 2042 was priced to yield 3.14% with a 5% coupon. A term bond in 2046 was priced to yield 3.62% with a 4% coupon. The deal is rated triple-A by S&P.
Goldman Sachs is expected to price the city of Chicago's $1.16 billion of taxable and tax-exempt general obligation bonds this week.
A market source indicated the taxable portion opened for indications of interest on Wednesday, with the tax-exempts expected to price on Thursday. This sort of schedule is fairly common for the city.
Goldman did put out a premarketing scale for the $888.76 million tax-exempt portion on Wednesday. According to a market source, the GO project and refunding Series of 2017A were pre-marketed to yield from 5.80% with a 5.75% coupon in 2029 to 5.96% with a 5.75% coupon in 2031. The bonds were also pre-marketed to yield from 6.08% with a 6% coupon in 2033 to 6.19% with a 6% coupon in 2035. A term bond in 2038 was pre-marketed to yield 6.25% with 6% coupon.
The deal is rated BBB-plus by S&P and Kroll Bond Rating Agency and BBB-minus by Fitch.
Since 2007, Chicago has issued about $26.68 billion of debt, with the largest issuance occurring in 2015 when it sold roughly $4.24 billion of debt. The windy city saw its lowest issuance total in the past 10 years back in 2009 when it issued roughly $778 million. The city has issued more than $2 billion every year since 2013 and a total of eight times since 2007.
Secondary Market
The 10-year benchmark muni general obligation yield was as many as two basis pointer higher from 2.14% on Tuesday, while the yield on the 30-year GO was between one and three basis points higher from 2.88%, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were weaker Wednesday around midday. The yield on the two-year Treasury gained to 1.17% from 1.15% on Tuesday, while the 10-year Treasury yield increased to 2.37% from 2.32%, and the yield on the 30-year Treasury bond rose to 2.98% from 2.93%.
On Tuesday, the 10-year muni to Treasury ratio was calculated at 92.0% compared to 90.4% on Friday, while the 30-year muni to Treasury ratio stood at 98.3%, versus 97.4%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 40,856 trades on Tuesday on volume of $9.47 billion.
