CHICAGO - Illinois received seven bids on its $402 million issue of high-grade, taxable revenue backed paper Tuesday with JPMorgan winning the bonds with a true interest bid of 4.2706%.
The state saw some narrowing of spreads since its last comparable sale of new-money taxable sales-tax backed bonds in May, but its TIC rose as overall interest rates are now higher.
The JPMorgan led-syndicate also included Academy Securities, Estrada Hinojosa & Co. Inc., and De La Rosa & Co.
Wells Fargo Securities had the cover bid for 4.3108%. The bids ranged from a low TIC of 4.2706 % to a high of 4.5565%. Other bidders included Bank of America Merrill Lynch, a Citi-led syndicate, Goldman Sachs, Jefferies, and a Morgan Stanley- led syndicate.
Illinois' senior lien sale marked the largest competitive issue in the market Tuesday but it was overshadowed by the much-anticipated $3.5 billion Puerto Rico sale.
The taxable Illinois bonds carried ratings of AAA from Standard & Poor's and a AA-plus from Fitch Ratings.
While the sales tax-backed bonds typically have been subject to some interest rate penalty for the Illinois name, the high ratings shield them from the steeper penalties investors impose on the state's stressed GO paper, which is rated in the low single-A category. The state has trimmed its interest rate penalties since passing a pension overhaul last December.
The bonds were priced at par, with yields ranging from 0.30% in 2015 to 4.62% in 2038. The spread to a comparable Treasury on the 2016 maturity which carried a coupon of .62 % was 25 basis points. The 2023 maturity paid a coupon of 3.49%, a 70 basis point spread to a comparable Treasury rate of 2.79%. A $251 million term bond maturing in 2038 paid a coupon of 4.62%, 90 basis points over comparable Treasuries.
The spreads ranged from 25 basis points to 105 basis points. Two maturities saw spreads of at least 100 basis points.
In contrast, Illinois' $300 million taxable issue in May drew 11 bids. Wells Fargo won the bid with a true interest cost of 3.286%.
Yields ranged from 0.30% on the first maturity to 3.88% on the final maturity in 2037.
The 10 year maturity paid a yield of 2.60%, almost 80 basis points over a 10-year Treasury yield of 1.82%. The 2037 maturity paid a yield of 3.88%, 88 basis points over comparable Treasuries.
Spreads ranged from 29 basis points to 143 basis points. Five maturities saw spreads of more than 100 basis points on the prior deal.
Proceeds will fund projects and grants authorized in the state's ongoing $31 billion capital program. The state intends to return to the market in the coming months with up to $1 billion in GO borrowing in two transactions.
