Muni Investors on Tuesday gobbled up the Port Authority of New York and New Jersey's $400 million of bonds subject to the alternative minimum tax and its $250 million of taxable bonds, traders said.
Traders said this indicated the market's appetite for taxable issuance will hold strong through the fourth quarter. The Port Authority deal may have benefited from pent up demand after a drop in taxable issuance last week, traders said. Sales of taxable bonds had fallen to $162.7 million, the lowest level of taxable issuance in four weeks, from $1.03 billion the week before, according to Thomson Reuters data..
The $400 million part of the Port Authority issuance was priced by Wells Fargo with yields ranging from 0.07% with a 3% coupon in 2015 to 3.67% with a 5% coupon in 2044.
Buyers said this was aggressive pricing for an AMT issuance, but guessed that the bonds came so expensive because the deal team knew with issuance so low all year there would be buyers.
The bonds have an optional call in 2024 at par, and a sinking fund on a term bond in 2044.
The $250 million of taxable bonds were also priced by Wells Fargo but at par with a coupon of 2.529% on the 2020 maturity a coupon of 4.426% on 2034.
The bonds were rated Aa3 by Moody's Investors Service and AA-minus by both Standard & Poor's and Fitch Ratings.
Tax-Exempts:
The tax-exempt side of the market was also active on Tuesday.
The New Jersey Economic Development Authority sold $525 billion of school facilitates construction bonds. JP Morgan Securities priced the deal with yields ranging from 0.82% with a 2.50% coupon in 2016 to 4.09% with a 5% coupon in 2040.
The bonds contain an optional par call in 2024, an two sinking funds on two term bonds both in 2040.
This issuance was done in conjuncture with a $119.1 million school facilities construction refunding SIFMA index note sale.
The 2017 maturity was priced at par in a coupon 73 basis points above SIFMA.
The notes can be called at par in 2016.
Both the bond and the note sections were rated A2 by Moody's and A-minus by S&P and Fitch.
A two-part $515.65 million District of Columbia deal was priced by Loop Capital Markets. The $379.52 million new issue general obligation bonds were sold with yields ranging from 0.58% with a 3% coupon in 2017 to 3.20% with a 5% coupon in 2038. The $136.125 million refunding bonds had yields of 0.12% with a 1% coupon in 2015 to 2.99% with a 5% coupon in 2033.
Both parts of the deal can be called at par in 2024, and earned ratings of Aa2 from Moody's, and AA from S&P and Fitch.
Puerto Rico Trans Note Sale
The Puerto Rico Senate approved the Commonwealth's $1.20 billion tax revenue anticipation note issuance. The sale was approved by the Puerto Rico House of Representatives last month.
The benchmark Puerto Rico GO 8s in 2035 strengthened three basis points on Tuesday morning from Monday, to 9.17%, according to Bloomberg data.
A source told The Bond Buyer that this strength is not an indication the GO is performing better in response to the Senate approving the sale, and said the overall trend has been a gradual weakening of the 8s in 2035.
The bonds were trading at 8.84% on Sept. 2, according to data provided by Bloomberg.
Scales
Municipal bonds strengthened on Tuesday with yields falling by on basis point for bonds maturing in six to seven years, according to Municipal Market Data's triple-A scale. Bonds maturating in eight to 12 years' yields fell by two basis points, three basis points for 13 to 27 maturities, and four basis points for 28 to 30 year maturities.
The two-year held steady at 0.57%, according to Municipal Market Advisor's data. The 10-year's yield fell by two basis points to 2.18%, and the 3.31% by one basis point to 3.31%.
Treasuries also strengthened on Tuesday with the two-year note's yield dropping by three basis points to 0.51%, the 10-year by nine basis points to 2.34% and the 30-year by eight basis points to 3.05%.
