California sells $1.4B of taxable GOs, NYS Thruway $1.7B tax-exempts price

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Municipal bond buyers saw a surge of supply sweep into the market on Wednesday as California and New York issues grabbed the spotlight.

Primary market
California (Aa2/AA-/AA) sold $1.13 billion of taxable general obligation bonds in two offerings.

BofA Securities won the $680.135 million of Bid Group A various purpose construction GOs with a true interest cost of 2.3596%. Morgan Stanley won the $457.4 million of Bid Group B various purpose GO refunding bonds with a TIC of 2.3901%.

Proceeds will be used to finance capital improvements and to refund certain outstanding GO commercial paper notes. Public Resources Advisory Group is the financial advisor and Orrick Herrington is the bond counsel.

Since 2009, the state has sold around $98 billion of debt, with the most issuance in 2009 when it offered $23 billion. It sold the lowest amount in 2011 when it issued about $4.9 billion.
Goldman Sachs priced the New York State Thruway Authority’s (A2/A-/NR/NAF) $1.7 billion of Series 2019B tax-exempt general revenue junior indebtedness obligations for retail investors ahead of Thursday’s institutional pricing. Assured Guaranty Municipal insured $50 million of the 2045 maturity, $50 million of the 2050 maturity and $50 million of the 2053 maturity.

Siebert Cisneros Shank is a lead manager with Barclays Capital, Citigroup, JPMorgan Securities, Morgan Stanley, RBC Capital Markets, Academy Securities, Drexel Hamilton, BofA Securities, Loop Capital Markets, Jefferies, Raymond James & Associates, Oppenheimer & Co. and Roosevelt & Cross as co-managers. PRAG and Acacia financial Group are the financial advisors. Hawkins Delafield & Wood is the bond counsel.

Citigroup was set to price NYS Thruway’s $950 million of taxable Series M bonds.

BofA priced the Piedmont Healthcare’s (A1/AA-/NR/NR) $562.165 million composite issue of revenue bonds and revenue anticipation certificates.

JPMorgan Securities priced the East Baton Rouge Sewerage Commission, La.’s (NR/AA-/AA/NR) $384.695 million of revenue refunding bonds.

BofA priced the Ohio Water Development Authority’s (Aaa/AAA/NR/NR) $300 million of Series 2019B water pollution control loan fund refunding revenue and revenue bonds.

Citi priced the Western Minnesota Municipal Power Agency’s (Aa3/NAF/AA-/NAF) $322.025 million of Series 2019A taxable power supply revenue refunding bonds.

Morgan Stanley priced the Wisconsin Health and Educational Facilities Authority (Aa2/AA+/AA+/NR) $138.75 million of Series 2019A bonds for Ascension Senior Credit Group.

Goldman Sachs priced the San Diego Unified School District of San Diego County, California’s (Aa2/NR/F1+/AAA)$322.405 million of dedicated unlimited ad valorem property tax GOs consisting of Election of 2012 Series K-2, Election of 2012 Series L, and Election of 2018 Series C-2, and priced $27.595 million of taxables consisting of Election of 2012 Series K-1 and Election of 2018 Series C-1.

BofA priced the Philadelphia School District’s (A2&Baa3/NR/A+&BB+/NR) $324.175 million of GOs, consisting of Series 2019A, Series 2019B green bonds and Series 2019C refunding bonds. The deal is insured by the Pennsylvania State Aid Intercept program. For the Series 2019A bonds, AGM insured $11.83 million of the 2033 maturity and $12.425 million of the 2034 maturity, which are rated A2 by Moody’s and AA by S&P.

BofA also priced the State Public School Building Authority, Pa.’s (Baa3/NR/BB+/NR) $187.73 million of school lease revenue refunding bonds for the Philadelphia School District project. AGM insured $20.46 million of the 2031 maturity, which is rated A2 by Moody’s and A-plus by Fitch.

The Virginia Public School Authority (Aaa/AAA/AAA) sold $109.155 million of Prince William County Series 2019A special obligation financing bonds. BofA Securities won the issue with a TIC of 2.1763%. Public Resources Advisory Group and PFM Financial Advisors are the financial advisors. McGuireWoods and Norton Rose are the bond counsel. Proceeds are being used to buy GOs issued by Prince William County, which will use its proceeds to pay the costs of various school improvement projects.

King County, Wash., (Aaa/AAA/NR) sold $100.345 million of Series 2019 limited tax GOs payable from sewer revenues. Citigroup won the bonds with a TIC of 2.5406%. Piper Jaffray is the financial advisor; Pacifica Law Group is the bond counsel. Proceeds will be to acquire and improve the county’s sewer system.

Siebert Cisneros Shank received the written award on Atlanta, Georgia’s (Aa3/AA-/AA-) $255.02 million of Series 2019E airport general revenue refunding bonds not subject to the alternative minimum tax and Series 2019F airport passenger facility charge and subordinate lien general revenue refunding non-AMT bonds.

Citigroup received the award on Cupertino Union School District, Calif.’s $120.535 million of taxable GO refunding bonds it won on Tuesday.

Wednesday’s bond sales
Click here for the California $680M sale

Click here for the California $457M sale

Click here for the NYS Thruway retail pricing

Click here for the Piedmont pricing

Click here for the Virginia sale

Click here for the Philadelphia pricing

Click here for the SBA pricing

Click here for the Minnesota pricing

Click here for the East Baton Rouge repricing

Click here for the East Baton Rouge pricing

Click here for the Ohio pricing

Click here for the Wisconsin pricing

Click here for the San Diego pricing

Click here for the Atlanta award

Click here for the Atlanta pricing

Click here for the Cupertino award

Secondary market
Munis were weaker on the MBIS benchmark scale, with yields rising by one basis point in the 10- and 30-year maturities. High-grades were also weaker, with yields on MBIS AAA scale rising by one basis point in the 10-year maturity and by two basis points in the 30-year maturity.

On Refinitiv Municipal Market Data’s AAA benchmark scale, the yield on the 10-year GO rose one basis point to 1.42% as the 30-year rose two basis points to 2.03%.

“The ICE muni yield curve is one basis point higher with tobaccos mixed and high yield unchanged. Markets are reportedly focusing on over $7 billion in new issue pricing that is coming to market,” ICE Data Services said in a market comment. “Taxables are down two to three basis points and Puerto Rico is unchanged.”

The 10-year muni-to-Treasury ratio was calculated at 81.3% while the 30-year muni-to-Treasury ratio stood at 90.7%, according to MMD.

Stocks were little changed as Treasuries traded stronger. The Treasury three-month was yielding 1.669%, the two-year was yielding 1.581%, the five-year was yielding 1.561%, the 10-year was yielding 1.747% and the 30-year was yielding 2.235%.
Previous session's activity
The MSRB reported 36,238 trades Tuesday on volume of $8.18 billion. The 30-day average trade summary showed on a par amount basis of $11.00 million that customers bought $5.94 million, customers sold $3.21 million and interdealer trades totaled $1.87 million.

California, New York and Texas were most traded, with Golden State taking 16.632% of the market, the Empire State taking 14.329% and the Lone Star State taking 11.47%.

The most actively traded securities were the New York Metropolitan Transportation Authority Series 2019E BAN 4s of 2020, which traded nine times on volume of $36.33 million.

ICI: Muni funds see $1.95B inflow
Long-term municipal bond funds and exchange-traded funds saw a combined inflow of $1.953 billion in the week ended Oct. 9, the Investment Company Institute reported on Wednesday.

It was the 41st straight week of inflows into the tax-exempt mutual funds and followed a revised inflow of $1.615 billion in the previous week.

Long-term muni funds alone saw an inflow of $1.692 billion after a revised inflow of $1.512 billion in the previous week; ETF muni funds alone saw an inflow of $261 million after an inflow of $103 million in the prior week.

Taxable bond funds saw combined inflows of $3.856 billion in the latest reporting week after revised inflows of $6.803 billion in the previous week.

ICI said the total combined estimated outflows from all long-term mutual funds and ETFs were $5.981 billion after revised outflows of $6.091 billion in the prior week. Equity funds were the biggest losers of the week with $11.528 billion of outflows.

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.

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Primary bond market Secondary bond market Municipal bond funds State of California New York State Thruway Authority Metropolitan Transportation Authority King County Washington City of Atlanta, GA Virginia Public School Authority