The $566.55 million Massachusetts Water Pollution Abatement Trust state revolving fund refunding bonds will receive heavy demand during its institutional sale period on Thursday despite high prices, investors say.
Bank of America Merrill Lynch priced the bonds with yields ranging from 0.14% with a 5% coupon in 2015 to 2.70% with a 5% coupon in 2028.
"Massachusetts paper trades like a food fight, and since it's a utility, an essential service system, it will be pretty popular," a trader in New York said. "It's going to trade super rich and people will buy it anyway, because they're starved for Massachusetts paper."
The bonds earned triple-A ratings from Moody's Investors Service, Standard & Poor's, and Fitch Ratings. A retail order period was held on Wednesday, and the bonds can be called in 2024 at par.
"The Massachusetts deal will get a fair amount of demand," a second trader in New York agreed.
The first trader in New York noted the mere fact it's a larger than $500 million issuance coming during a short, low-volume week will amp up the demand.
"Bank of America will bang it out pretty decently," he said.
Bank of America will offer $542 million of Metropolitan Washington Airport Authority revenue and refunding bonds. The deal received an A1 rating from Moody's and an AA-minus by both S&P and Fitch.
Barclay's Capital will bring a three part deal totaling $381.3 million of Connecticut Health and Education Facilities Authority revenue bonds. The deal is rated Aa3 by Moody's and AA-minus by Fitch.
Municipal yields fell on the long-end dropping by up to one basis point for the 20 year, by as much as two basis points for 11- to 25-year maturities, and by one basis point for the 26 to 30 years.
Treasury yields fell on Thursday with the two-year note dropping two basis points to 0.36%, by three basis points for the 10-year to 2.42%, and by one basis point to 3.29% on the 30-year.
