Essential service bonds continue to be considered among the safest municipal market investments, faring better than general obligations bonds in the current economic environment, on the back of the rate-setting ability of issuers and investor perception that these bonds are more immune to fiscal stress, according to market sources.

As an example, the New York City Municipal Water Finance Authority Tuesday priced $554 million of 2042 taxable Build America Bonds, upsized from the $400 million it initially planned. The authority structured the deal as one maturity with bifurcated coupons of 5.72% for $324 million with a make-whole call and 6.12% for $230 million with a 10-year par call, which, after the federal subsidy, will cost the issuer 3.72% and 3.98%, respectively.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.