Yields on revenue bonds from the $675 million negotiated part of the New York City Transitional Finance Authority deal were lowered during institutional pricing due to the heavy demand the bonds received during their two-day retail order period.
Yields on the 2022 maturity were lowered the most, five basis points, to 2.20%, and bonds with longer maturities from 2026 to 2034 fell the least, one basis point. Yields on the 2016 and 2017 maturities remained at 0.66%.
Overall Morgan Stanley priced the bonds with yields ranging from 0.66% with a 4% coupon in 2017 to 3.71% with a 5% coupon in 2039. There is a sealed bid in 2016. The bonds are callable at par in 2024 with a possible mandatory tender on or after August 1, 2024. The bonds will be in fixed-rate mode until the call date.
"The bonds were bought up during their retail sale period, no one saw that demand waning during their institutional sale," a trader in New York said. "It makes sense that the TFA would take advantage of this."
A trader on the west coast said that yields were lowered mostly because of the retail order demand, but also because the muni market strengthened on Tuesday and Wednesday morning.
Yields fell by one basis point for five- to 30-year maturities Tuesday, according to Municipal Market Data's triple-A scale. They declined by as much as one basis point for three to nine years and for 14- to 30-year maturities, and up to two basis points for 10- to 13-year maturities on Wednesday.
The TFA auctioned $125 million of taxable revenue bonds in the competitive market on Wednesday. RBC Capital Markets appears high with a TIC of 2.9993%.
Market participants said both deal offer a lot of spread over other high-grade names.
Other deals priced include $118.9 million of California Health Facilities Financing Authority revenue bonds. Bank of America is the lead underwriter. The deal is rated Aa3 by Moody's, AA-minus by S&P and AA by Fitch. The deal has two maturities in 2044. The $32 million maturity was priced at par to yield 4.25%, while the $86.8 million was priced to yield 3.93% with a 5% coupon.
"The Cal health facilities deal will be strong," the New York trader said. "Hospital states are in demand for yield."
Goldman Sachs priced and repriced a three part revenue bond deal for the Oregon Department of Administrative Services Lottery that's sections total $105.2 million, $91.87 million, and $19.18 million. The deal is rated Aa2 by Moody's and AAA by S&P.
Traders said there are a couple of community college deals this week that are of interest.
Morgan Stanley will bring $104 million of Foothill-De Anza Community College District general obligation bonds. The deal is rated Aaa by Moody's.
Wells Fargo Advisors will issue $100 million of Laredo Community College, Texas, general obligation bonds. The deal is rated Aa3 by Moody's, and AA-minus by both S&P and Fitch.
"Community college districts have more of flexibility on the expense side in the case of student demand or prioritizing different classes," the New York trader said. "There's not much of a ten-year issue with community colleges. I'm not sure how they will price, but it's a sector we're interested in."
