Raymond James Wednesday priced $190.145 million Dallas and Fort Worth, Texas, airport joint revenue improvement bonds, bringing much needed yield to the muni market.
Yields on the bonds ranged from 2.44% with a 5% coupon in 2021 to 4.5% at par in 2024.
"In general [the airport sector] is going to perform well now because most airports are a little higher yielding when people are reaching for yield," a trader in Chicago said. "It's a sector people will gravitate to because it's higher yielding."
The deal is rated A-plus by Standard & Poor's and A by Fitch Ratings. The bonds can be called at par in 2022.
In a report released Tuesday, Janney Capital Markets said it viewed the airport sector as having a "stable" outlook. Janney wrote in a longer report released on May 9 that more people are flying since the economic recovery.
"It's easier to explain airport credits to customers because the airport sector is on the rebound rather than low credits that are continuously going down," a trader in Florida said.
The DFW bonds' high yield boosts their attractiveness, investors said. Low municipal supply and high demand for munis has driven down yields. Yields for two-year maturities have fallen by four basis points to 0.34% from the beginning of the month to market close Tuesday, according to Municipal Market Advisors. They have declined by 13 basis points to 2.19% on the 10-year, and by 16 basis points to 3.45% on the 30-year.
"I can see there being a lot of demand for the Dallas Fort Worth bonds," the trader in Chicago said. "You can pick up yield and they are cheaper than an AA GO, obviously."
Piper Jaffray will issue $117.3 million of Salina Unified School District 305, Kan., GO refunding and improvement bonds. The deal is not rated.
Bank of America Merrill Lynch repriced$100 million of pollution control revenue refunding bonds for the city of Rockport, Ind. The deal has a 1.75% coupon in 2025 and is not rated.
Raymond James will bring $100 million of California Contra Costa Water District refunding bonds. The deal received an AA-plus rating by S&P and AA by Fitch.
Most of the competitive deals are expected to enter the market Wednesday including the two largest competitive deals of the week.
Massachusetts is set to auction $200 million of GOs, rated Aa1 by Moody's and an AA-plus by both S&P and Fitch.
Fulton County, Ga., will issue $200 million of tax anticipation notes with an SP-1-plus rating from S&P and an F1-plus rating from Fitch.
The Kansas Development Finance Authority will bring a two-part deal totaling $135.5 million of revenue bonds to the market. The deal consists of $115.9 million Kansas State University housing projects bonds and $19.5 million Kansas State University College of Engineering project bonds. The deal is rated Aa2 by Moody's.
Texas' Frisco Independent School District is expected to auction $116.5 million of unlimited tax school building and refunding bonds. The deal is rated Aaa by Moody's and AAA by S&P.
Treasuries weakened Wednesday morning, with 30-year yields and the 10-year benchmark climbing three basis points each to 3.41% and 2.55%, respectively. The two-year notes rose two basis points to 0.36%.
