Against a backdrop of a softer tone and the week’s largest deals arriving in the tax-exempt market, Puerto Rico bonds traded mostly flat Wednesday, a day after commonwealth officials attempted to reassure investors of its willingness and ability to pay debts.
Traders said yields on the Sales Tax Financing Corp., or COFINA, bonds were flat in intraday trading. “There is light volume with some odd-lots going cheaper relative to interdealer trades,” a Chicago trader said. “There is not much in terms of sizeable blocks and those that are moving are just the flat interdealer trades.”
Analysts at Interactive Data said COFINA bonds saw better bids Wednesday. Indeed a customer bought a block size trade of COFINA 5.75s of 2037 at 8.58%, down in yield from 9.10% on Friday.
Yields on Puerto Rico Highway and Transportation Authority 5.25s of 2031 rose three basis points to 8.50%.
In the high-grade market, the overall tone felt weaker. “It’s a frustrating market,” a New York trader said. “It’s difficult to tell where things should trade.” This trader said the market traded two to four basis points weaker.
JPMorgan priced for retail and institutions the largest deal of the week, $955.9 million of Dormitory Authority of the State of New York sales tax revenue bonds, rated AAA by Standard & Poor’s and AA by Fitch Ratings. By Tuesday afternoon, retail had placed $400 million of orders, allowing the issuer to accelerate institutional pricing.
Yields ranged from 0.50% with 3% and 5% coupons in a split 2016 maturity to 4.68% with a 4.625% coupon and 4.52% with a 5% coupon in a split 2043. Bonds maturing in 2015 were offered via sealed bid.
The bonds are callable at par in 2023. Yields were lowered between one and three basis points on bonds maturing between 2016 and 2021 from retail pricing but raised between one and five basis points on bonds maturing between 2033 and 2038.
Citi priced for retail and institutions $360.1 million of triple-A Battery Park City Authority senior revenue bonds.
Yields on the first series of $353.2 million of tax-exempt bonds ranged from 0.17% with a 2% coupon in 2014 to 4.05% with a 4% coupon and 3.92% with a 5% coupon in a split 2031 maturity. Yields were lowered as much as seven basis points on bonds maturing between 2015 and 2024.
The second series of $6.9 million of taxable bonds yielded 0.30% with a 2% coupon in 2014 and 0.50% with a 2% coupon in 2015.
RBC Capital Markets priced for institutions $207.1 million of Pennsylvania Turnpike Commission bonds. The deal includes $106 million of subordinate revenue bonds — rated A3 by Moody’s Investors Service and A-minus by Standard & Poor’s and Fitch — and $101.1 million of motor license fund-enhanced turnpike subordinate special revenue bonds rated A1 by Moody’s and AA by Fitch.
Yields on the first series, $79.5 million of turnpike subordinate revenue bonds, ranged from 0.78% with a 3% coupon in 2015 to 5.198% with a 5% coupon in 2043.
The bonds are callable at par in 2023. Yields were raised between three and eight basis points on bonds maturing between 2019 and 2025 from retail pricing Tuesday.
The second series, $26.5 million of turnpike subordinate revenue convertible capital appreciation bonds, yielded 5.90% in 2037 and 6.05% in 2041.
Yields on the third series, $77.5 million of motor license fund-enhanced turnpike subordinate special revenue bonds, ranged from 0.35% with a 2% coupon in 2014 to 5.08% with a 5.25% coupon in 2043.
The bonds are callable at par in 2023. Yields were raised between two and three basis points on bonds maturing between 2020 and 2025.
The fourth series, $23.7 million of motor license fund-enhanced turnpike convertible capital appreciation bonds, yielded 5.70% in 2037 and 5.80% in 2040.
In the secondary market, trades compiled by data provider Markit showed mostly weakening. Yields on Arizona Board of Regents 5s of 2020 rose five basis points to 2.60%.
Yields on Puerto Rico’s Children’s Trust Fund Tobacco Settlement 5.375s of 2033 and Illinois 5s of 2034 rose three basis points each to 6.03% and 5.50%, respectively. Yields on New Jersey State Turnpike Authority 5.25s of 2040 increased one basis point to 4.45%.
On Wednesday, yields on the triple-A Municipal Market Data scale ended as much as three basis points higher.
The 10-year and 30-year yields rose three basis points each to 2.65% and 4.26%, respectively. The two-year was steady at 0.35% for the fourth session.
Yields on the Municipal Market Advisors benchmark scale ended as much as two basis points higher. The 10-year yield increased one basis point to 2.78% and the 30-year yield climbed two basis points to 4.39%.
The two-year was unchanged at 0.55% for the sixth session.
Treasuries were stronger on news the Senate reached a deal to avoid hitting the debt ceiling limit. The benchmark 10-year and 30-year yields slid six basis points each to 2.67% and 3.73%, respectively. The two-year yield fell three basis points to 0.34%.
