Top-rated municipal bonds finished stronger on Tuesday, according to traders, as the first of the week’s large deals hit the market.

In the negotiated sector, Siebert Cisneros Shank priced the Dormitory Authority of the State of New York’s $345.9 million of Series 2017A dormitory facilities revenue bonds for institutions after a shortened retail order period.

The DASNY deal was priced to yield from 1.04% with a 4% coupon in 2019 to 3.15% with a 5% coupon in 2038. The 2042 maturity was priced as 5s to yield 3.21% and the 2046 maturity was priced as 5s to yield 3.25%. A 2018 maturity was offered as a sealed bid.

Earlier, the issue was priced for retail to yield from 1.07% with a 4% coupon in 2019 to 3.16% with a 5% coupon in 2038. No retail orders were taken in the 2032, 2034-2035, 2042 or 2046 maturities.

Traders said the deal was helped by low yields and high demand.

“The deal had to be hot; lower yields also helped,” said one New York trader. “The market is on fire right now, huge inflows last week and low supply are the reasons why.”

Another New York trader concurred.

“It was well oversubscribed, you got a little spread with a little different name,” said the second trader. “There are no bonds around, and you have a grinding Treasury market and cash coming into the market. As long as there is green on the screen, people will put money to work in the new deals.”

The deal is rated Aa3 by Moody’s Investors Service and A-plus by Fitch Ratings. Both raters maintain stable outlooks on the credit.

And DASNY wasn’t the only deal to benefit from high demand on Tuesday.

JPMorgan Securities priced the Geisinger Authority, Montour County, Pa.’s $349.27 million of Series 2017A-1 health system revenue bonds for the Geisinger Health System for institutions after holding a retail order period earlier in the day.

The issue was priced as 3 3/4s to yield 3.89% in 2042, as 5s to yield 3.44% in 2045 and as 4s to yield 3.92% in 2047. The issue was priced earlier for retail as 3 3/4s to yield 3.91% in 2042, as 5s to yield 3.47% in 2045 and as 4s to yield 3.89% in 2047.

The deal is rated Aa2 by Moody’s and AA by S&P Global Ratings.

And Bank of America Merrill Lynch priced the Geisinger Authority’s $236.57 million of Series 2017A-2 health system revenue bonds.

The deal was priced to yield from 0.94% with a 3% coupon in 2018 to to 3.80% with a 4% and 3.37% with a 5% coupon in a split 2039 maturity.

That deal is also rated Aa2 by Moody’s and AA by S&P.

Since 2007, the authority has issued about $1.44 billion of debt, with the most issuance before this year occurring in 2009, when it sold $272 million of securities. It did not come to market in 2008, 2010, 2012 or 2015 through 2016.


On Tuesday, Wells Fargo Securities priced the Katy Independent School District, Texas’ $257.46 million of Series 2017 unlimited tax school building bonds.

The issue was priced to yield from 0.84% with a 4% coupon in 2018 to 3% with a 5% coupon in 2039; a 2042 maturity was prices as 5s to yield 3.05% and a 2047 maturity was priced as 4s to yield 3.49%.

The deal, which is backed by the Permanent School Fund guarantee program, is rated triple-A by Moody’s and S&P.

A premarketing scale was released on the Pennsylvania State University’s $284.77 million of Series 2017A tax-exempt and Series 2017B taxable bonds, according to market sources.

Sources said Barclays Capital premarketed the $159.77 million of Series 2017A tax-exempts to yield from 1.07% with a 4% coupon in 2019 to 3.02% with a 5% coupon in 2037; a 2042 maturity was premarketed as 5s to yield 3.11% and a 2047 maturity was premarketed as 5s to yield 3.16% with the 2018 maturity being offered as a sealed bid.

Sources said the $125 million of Series 2017B taxables were being premarketed to yield from about 30 basis points over the comparable Treasury security in 2019 to about 120 basis points over the comparable Treasury security in 2032 and about 80 basis points over the comparable Treasury security in 2037 and about 95 basis points over the comparable Treasury security in 2047 with the 2018 maturity being offered as a sealed bid.

The deal is rated Aa1 by Moody’s and AA by S&P.

In the competitive arena on Tuesday, the Miami-Dade County School District, Fla., sold $250 million of Series 2017 unlimited tax general obligation school bonds.

Morgan Stanley won the bonds with a true interest cost of 3.57%. The issue was priced to yield from 0.95% with a 4% coupon in 2018 to 3.62% with a 4% coupon in 2039; a 2042 maturity was prices as 4s to yield 3.74% and a 2047 maturity was priced as 4s to yield 3.79%.

The deal is rated Aa3 by Moody’s.

Henrico County, Va., competitively sold $102.26 million of Series 2017A unlimited tax GO public improvement bonds on Tuesday.

Bank of America Merrill Lynch won the bonds with a TIC of 2.63%. The issue was priced to yield from 0.89% with a 5% coupon in 2018 to 3.22% with a 3.50% coupon in 2037.

The deal is rated triple-A by Moody’s, S&P and Fitch.

Since 2008, the county has issued about $972 million of debt, with the most issuance occurring in 2010 when it sold almost $192 million of securities. It sold the least debt in 2012, when it offered $37.5 million of bonds.

Secondary market
Municipals strengthened along with Treasuries as markets reacted to declining expectations for U.S. tax reform and geopolitical concerns, including the deteriorating situation in North Korea and the uncertainty surrounding the upcoming elections in France and the U.K.

The yield on the 10-year benchmark muni general obligation fell five basis points to 2.02% from 2.07% on Monday, while the 30-year GO yield dropped five basis points to 2.86% from 2.91%, according to the final read of Municipal Market Data's triple-A scale.

The yield on the two-year Treasury declined to 1.16% from 1.20% on Monday, while the 10-year Treasury yield dropped to 2.18% from 2.26%, and the yield on the 30-year Treasury bond decreased to 2.84% from 2.92%. The 30-year Treasury bond’s yield was at its lowest level since last November, according to Bloomberg.

The 10-year muni to Treasury ratio was calculated at 92.9% on Tuesday compared with 91.6% on Monday, while the 30-year muni to Treasury ratio stood at 100.8%, versus 100.0%, according to MMD.

MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 39,948 trades on Monday on volume of $7.995 billion.

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Chip Barnett

Chip Barnett

Chip Barnett is a journalist with more than 40 years of experience. Barnett is currently Senior Market Reporter for The Bond Buyer.
Aaron Weitzman

Aaron Weitzman

Aaron Weitzman is a markets reporter for The Bond Buyer, focusing on the sell side of the municipal bond market.