The city of New York's $900 million of tax-exempt fixed-rate general obligation refunding bonds, the largest deal in the negotiated market this week, entered the first day of its retail order period on Monday.
Yields on $706.7 million ranged from 0.97% with a 5% coupon maturing in 2018 to 3.40% with a 5% coupon in 2034. There are sealed bids in 2016 and 2017.
"With the city having to deal with labor contracts and additional healthcare costs, it'll be interesting to see if there will be any widening of spreads," a New York trader said. "There's been controversy about how the city is run so it will be interesting to see how the deal is received," the New York trader said."
Yields on $193.3 million ranged from 0.97% with a 3% coupon in 2018 to 3.65% with a 3.50% coupon in 2034. There are sealed bids in 2015, 2016, and 2017.
The bonds from both series are callable at par in 2024.
The underwriters will accept institutional orders on Wednesday. Bank of America is the lead underwriter. The deal is rated Aa2 by Moody's Investors Service and AA by both Standard & Poor's and Fitch Ratings.
Based on the market's demand for New York paper, traders are calling the deal and the Port Authority deal the highlights of the week.
Citigroup Global Market will bring a two-fold deal totaling $833.8 million of New York and New Jersey Port Authority revenue bonds on Thursday. The bonds mature from 2015 to 2034.
JP Morgan will bring $166.1 million of Idaho Health Facilities Authority revenue bonds to the market on Tuesday.
"It's the Saint Luke healthcare system, which was just downgraded to a low category A-minus," the New York trader said. "There's not a lot of liquidity."
The deal is rated A3 by Moody's and A-minus by S&P.
Citigroup will bring $350 million of San Diego Regional Transportation Commission revenue bonds on Wednesday. The bonds mature from 2015 to 2048 and are rated AAA by both Standard & Poor's and Fitch Ratings.
Goldman Sachs will issue $230 million of Harris County, Texas, GOs on Wednesday. The deal is rated Aaa by Moody's and AAA by Fitch.
Citigroup will price $266.4 million of Michigan Truck Line Fund Refunding bonds on Wednesday. The deal is rated Aa2 by Moody's and AA-plus by S&P.
In the competitive market, Minnesota will auction a four-part deal totaling $904 million of general obligation bonds on Tuesday.
"It's a strong credit," the New York trader said. "We'll buy it, but frankly it's usually not that attractive. It's good for the state. There's no opportunity for additional yield."
The bonds will mature from 2015 to 2034. The deal is rated Aa1 by Moody's and AA-plus by both S&P and Fitch.
Alabama University Board of Trustees will sell a two-part deal totaling $243.9 million of revenue bonds on Tuesday.
"Any time there is a flagship school deal usually it's a pretty secure issue," the New York trader said. "Not sure how exciting the yields will be."
The bonds mature from 2015 to 2021 and are rated Aa2 by Moody's and AA-minus by S&P.
Munis weakened Monday, with yields on bonds maturing in 24 to 29 years inching up as much as one basis point. Yields on bonds maturing in one to 23 years were steady, according to the Municipal Market Data's triple-A scale.
Treasuries were mixed Monday, with the 30-year yield falling one basis point to 3.24% and the 10-year benchmark climbing one basis point to 2.43%. The two-year note was unchanged from Friday's market close at 0.45%.
