The successor agency to the Inland Valley Development Agency's $239.9 million of tax allocation refunding bonds that came to market Thursday were in demand because they offered investors with an alternative purchase to traditional California GOs, market participants said.
"The market has been pretty monotonous, pretty quiet," a trader in New York said. "If you are a California state GO buyer, you want to jump on a different thing, a different name to break up the monotony."
Yields on $146.2 million of non-alternative minimum tax bonds ranged from 4.09% with a 5.25% coupon in 2037 to 3.97% with a 5% coupon in 2044. There is a term bond in 2037 and two in 2044.
"There was a diversification element that brought investors into Inland, as well as a lack of options," a trader in California said.
The trader in New York said the issuance was priced fairly.
"There was the $146 million, which only had three maturities on the long end, and the other part was taxable with serial maturities," he said. "It was priced appropriately, its priced kind of where I thought it would be."
The California trader agreed the deal was priced fairly.
The $93.7 million of federally taxable bonds' yields ranged from 2.745% in 2018 to 5.50% in 2033. There is a make whole call at Treasury plus 35.
"On the taxable side, the series Bs, have performed very, very well," the trader in California said. "There was a lack of good going away buyers when Barclays priced it in the last couple of days. The taxable portion broke up very well after the bonds were free to trade, its after-market performance was quite impressive."
Both bond series are callable at par in 2024 and are rated A-minus by Standard & Poor's.
The California trader said that this issuance has been doing well, especially because Inland Valley issuances are generally weak bonds that trade in the lower end of the credit spectrum.
"Inland Valley has kind of been the poster child for some of the land recession during the financial crisis a few years back," the trader in California said. "It had a big run up in their housing prices."
Citigroup Global Markets priced $308.7 million of Houston airport systems special facilities revenue refunding bonds Thursday. Coupons range from 4.50% in 2020 to 5% in 2029. The deal is not rated.
Jefferies & Co. brought a three-part deal of $170.8 million of Harris County Flood Control District improvement refunding bonds to the market Thursday. The $73.8 million taxable part of the deal was priced at par to yield from 0.637% in 2016 to 3.211% in 2024. There is a sealed bid in 2015 and no call option.
Yields for the $60.3 million of taxable refunding bonds ranged from 2.58% with a 5% coupon in 2025 to 2.91% with a 5% coupon in 2029. There is a sealed bid in 2014. The bonds are callable at par in 2024.
Yields for $36.7 million of tax-exempt improvement refunding bonds ranged from 2.58% with a 5% coupon in 2025 to 2.70% with a 5% coupon in 2026. There is a sealed bid in 2014. The bonds are callable at par in 2024.The whole deal is rated Aaa by Moody's and AAA by S&P.
Piper Jaffray will bring $128.2 million of Kansas USD 480 Liberal School District refunding and improvement bonds to the market Thursday. The bonds mature serially from 2015 to 2039 and are rated A1 by Moody's Investors Service and A-plus by S&P.
There are no deals over $100 million slated for the competitive market Thursday.
Treasuries strengthened Thursday afternoon, with the 30-year yields and the two-year notes falling two basis points each to 3.38% and 0.40%, respectively. The 10-year benchmark slipped one basis point to 2.59%.
