Bond bonanza continues as most deals get big bumps
The municipal market kept rolling along as billions of new paper came and went just as quickly. With yields down yet again, most of the bigger transactions saw big bumps from preliminary to final pricing levels.
RBC Capital Markets priced the Allegheny County Hospital Development Authority’s (A1/A+/A+) $725.295 million of revenue bonds for the University of Pittsburgh Medical Center.
“The deal was roughly 10-times oversubscribed in some spots, with yields lowered as little as three and as much as 10 basis points on the long-end,” said one Mid-Atlantic trader. “It was heavily oversold.”
Yields were lowered nine basis points in the 10-year maturity and a 10 basis points on the last two maturities in 2038 and 2039.
“There is not a ton of A rated Pennsylvania paper away from school districts and turnpikes,” said Eric Kazatsky, portfolio manager at Clark Capital Management. “The credit, despite thinner margins, derives strength from its association with UPMC and its well-funded pension plans.”
Roosevelt and Cross priced the Dormitory of the State of New York’s $477.06 million of revenue bonds.
Wells Fargo ran the books on Texas’ (Aaa/AAA/AAA) $200.84 million of general obligation water financial assistance refunding bonds.
Morgan Stanley priced Fremont Union High School District, Calif.’s (Aaa/AAA/ ) $150 million of GO and green bonds.
Competitively, the Virginia College Building Authority sold $513.25 million of revenue bonds – Bank of America won the bidding with a 2.5199% true interest cost.
Howard County, Md., sold $131.845 million of consolidated public improvement project refunding bonds. Morgan Stanley won with a TIC of 2.8282%.
Wednesday’s bond sales
ICI: Muni funds see $2.3B inflow
Long-term municipal bond funds and exchange-traded funds took in a combined inflow of $2.331 billion in the week ended May 8, the Investment Company Institute reported on Wednesday.
It was the 18th straight week of inflows and followed an inflow of $2.141 billion into the tax-exempt mutual funds in the previous week.
Long-term muni funds alone saw an inflow of $2.006 billion after an inflow of $1.724 billion in the previous week; ETF muni funds alone saw an inflow of $325 million after an inflow of $416 million in the prior week.
Taxable bond funds saw combined inflows of $5.259 billion in the latest reporting week after inflows of $6.992 billion in the previous week.
ICI said the total combined estimated outflows from all long-term mutual funds and ETFs were $2.264 billion after inflows of $512 million in the prior week; equity funds were the biggest losers as they experienced $5.95 billion of outflows.
New York MTA to sell $1.2B of notes on Thursday
The New York Metropolitan Transportation Authority said it plans to competitively sell a total of $1.2 billion in two separate sales on Thursday. The revenue bond anticipation notes will be split into $1 billion of 2019B subseries 2019B-1 and $200 million of 2019B subseries 2019B0-2.
Munis were stronger on the MBIS benchmark scale Wednesday, which showed yields less than one basis point lower in the 10-year maturity and dipping no more than two basis points in the 30-year maturity. High-grade munis were stronger as well, with yields down less than one basis point in both the 10-year and 30-year maturities.
On Refinitiv Municipal Market Data’s AAA benchmark scale, the yield on both the 10-year muni GO and the 30-year muni yield decreased by three basis points.
The 10-year muni-to-Treasury ratio was calculated at 71.5% while the 30-year muni-to-Treasury ratio stood at 83.6%, according to MMD.
Previous session's activity
The MSRB reported 38,233 trades for Tuesday on volume of $11.085 billion. The 30-day average trade summary showed on a par amount basis of $299.664 million that customers bought $147.518 million, customers sold $99.260 million and interdealer trades totaled $52.885 million.
California, Texas and New York were most traded, with the Golden State taking 14.844% of the market, the Lone Star State taking 12.341% and the Empire State taking 9.885%.
The most actively traded security was the Puerto Rico Sales Tax Financing Corp. 5s of 2058, which traded 74 times on volume of $36.941 million.
Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Ziad Saba at 212-803-6079 for more information.