JP Morgan Securities won the bid for $402 million of taxable Build Illinois bonds, the largest deal in the competitive market on Tuesday.
While prominent bond issuers like Illinois, Texas and New York are scheduled to bring new bonds to market this week, deals done on Tuesday were somewhat overshadowed by a much-awaited $3.5 billion Puerto Rico sale.
The taxable Illinois bonds are rated AAA by Standard & Poor's and AA-plus by Fitch Ratings. The bonds are priced at par, with yields ranging from 0.30% in 2015 to 4.62% in 2038.
"The deals today might be a little bit overshadowed, there's definitely some truth to that," a sales and trading manager in New York said in an interview. "We've had a lot of retail investors ask about Puerto Rico instead of Connecticut or New York's deal this week, even though Puerto Rico is not marketed to them."
Also in the competitive market, Ohio sold $300 million of higher education GOs Tuesday, rated AA-plus by both S&P and Fitch.
In the negotiated market, Goldman, Sachs & Co. got the award on $135.4 million of Ohio Water Development revenue refunding bonds rated Baa3 by Moody's Investors Service and BBB-minus by Standard & Poor's.
The sale hit the market the same day that Gov. John Kasich will announce Ohio's budget legislation. The budget is predicted to highlight cuts to income-tax that may cost the state up to $600 million a year, according to Municipal Market Data.
Also in the negotiated market, Clark County, Nev., issued $100 million of highway revenue bonds backed by indexed fuel taxes and subordinate motor vehicle taxes. Yields ranged from 0.28% with a 4% coupon maturing in 2015 and 4.30% with a 5% coupon in 2034. The bonds are callable at par in 2024.
In other market developments, Chicago decided this week to about double the size of its GO offering slated for Thursday to nearly $800 million. The size remained fluid. Wells Fargo Securities is running the books on the issue.
"The size of the offering will depend on market conditions and demand, and we know that current interest rates will offer competitive pricing for this issuance," city finance spokeswoman Kelley Quinn said Tuesday.
The boost likely means the city won't return to the market this spring as it had previously planned. Moody's Investors Service earlier this month dropped the city from A3 to Baa1 and assigned a negative outlook as a result of the city's pension funding woes.
Treasury yields were mostly unchanged in the afternoon, with the 30-year and 10-year benchmark steady at 3.72% and 2.78%, respectfully. The two-year note yield rose one basis point to 0.39%.
Municipal bond yields measured by Municipal Market Data's AAA scale are steady to one basis point higher for bonds maturing between 2019 through 2038. Bonds maturing on the short end of the curve as well as those maturing beyond 2039 were unchanged.
with reporting from Yvette Shields
