Muni buyers see big bond deals from Conn., Pa., NYC, Hawaii issuers
The municipal bond market saw another wave of supply sweep in on Wednesday, led by issuers in Connecticut, Pennsylvania, Hawaii, and New York.
Siebert Cisneros Shank & Co. priced Connecticut’s $639.135 million of Series 2018E and Series 2018F tax-exempt general obligation bonds for institutions after holding a one-day retail order period.
The deal is rated A1 by Moody’s Investors Service, A by S&P Global Ratings, A-plus by Fitch Ratings and AA-minus by Kroll Bond Rating Agency.
Citigroup priced the Allegheny County Hospital Development Authority, Pa.’s $943.365 million of Series 2018A revenue bonds for the Allegheny Health Network Obligated Group. The deal is rated A by S&P.
Bank of America Merrill Lynch priced and repriced the city and county of Honolulu’s $272.91 million of Series 2018A and Series 2018B tax-exempt general obligation bonds and $189.705 million of Series 2018C, D, E & F taxable green bond GOs.
The deal is rated Aa1 by Moody’s Investors Service and AA-plus by Fitch Ratings. Both ratings agencies assign stable outlooks to the credit.
Since 2008, the city and county has issued about $7 billion of debt, with the most issuance occurring in 2015 when it sold nearly $1.6 billion. It did not come to market in 2013 or 2014.
RBC Capital Markets priced the New York City Municipal Water Finance Authority’s $263.755 million of Fiscal 2019 Series AA water and sewer system second general resolution revenue bonds for institutions after holding a retail order period in the morning.
The deal is rated Aa1 by Moody’s and AA-plus by S&P and Fitch.
RBC priced the Campbell Union High School District of Santa Clara County, Calif.’s’ $197 million of Election of 2016, Series B GOs.
The deal is rated Aa1 by Moody’s and AAA by S&P.
Piper Jaffray priced the Denton Independent School District, Texas’ $400.13 million of Series 2018 unlimited tax school building bonds.
The deal, backed by the Permanent School Fund guarantee program, is rated AAA by S&P and Fitch.
JPMorgan Securities priced the Board of Regents of the University of North Texas System’s $150.195 million of Series 2018A revenue financing system refunding and improvement bonds.
The deal is rated Aa2 by Moody’s and AA by Fitch.
Citi priced the Public Finance Authority’s $264.13 million of Series 2018A-1 senior revenue bonds for the Maryland Proton Treatment Center. The deal is unrated.
BAML received the official award on the city and county of Denver’s $2.526 billion of airport system subordinate revenue bonds.
The offering is one of the single-biggest aviation deals ever. It consists of $2.342 billion of Series 2018A bonds subject to the alternative minimum tax and $184.365 million of Series 2018B non-AMT bonds.
The deal is rated A2 by Moody’s, A by S&P and A-plus by Fitch. All three ratings agencies assign stable outlooks to the credit.
Click here for the institutional pricing
Click here for the Allegheny pricing
Click here for the Campbell UHSD pricing
Click here for the PFA pricing
Quality and quantity dictated the activity in the municipal bond market on Wednesday as investors continued to exhibit strong demand — especially for investment-grade paper — in a week where a glut of supply is up for grabs in a wide variety of financings.
The market exhibited fairly strong bids to start the day’s trading activity as nearly $12 billion of new issuance is making its way to market this week, noted Howard Mackey, managing director at NW Capital Markets in Hoboken, N.J.
“Today there is a strong tone in the Treasury market and I think that will lead to firmness in the muni market,” he said.
Although the summer season still has many investors in vacation mode, Mackey said a scarcity of high-grade paper to meet the excess demand is creating a strong environment. “There is very little product around — particularly in high-grade specialty states,” Mackey said, noting strong bids on paper from New York and New Jersey paper.
“Triple-A New York and New Jersey municipalities are trading at or through the [Municipal Market Data] scale for triple-A paper,” he added.
Bond Buyer 30-day visible supply at $14.74B
The Bond Buyer's 30-day visible supply calendar decreased $1.91 billion to $14.74 billion for Wednesday. The total is comprised of $2.47 billion of competitive sales and $12.27 billion of negotiated deals.
Municipal bonds were stronger on Wednesday, according to a late read of the MBIS benchmark scale. Benchmark muni yields fell as much as two basis points in the one- to 30-year maturities.
High-grade munis were mostly stronger, with yields calculated on MBIS’ AAA scale falling as much as one basis point in the one- to nine-year and 12- to 27-year maturities and rising less than a basis point in the 10- and 11-year and 28- to 30-year maturities.
“Municipals are being pushed higher in price thanks to a Treasury market that is seeing good flight to quality demand,” Michael Pietronico, chief executive officer at Miller Tabal Asset Management, observed at the end of Wednesday.
“Today’s gains have been greater further out the yield curve as a definite curve flattening bias exists in this market,” he added.
Municipals were stronger on Municipal Market Data’s AAA benchmark scale, which showed the yield on the 10-year muni general obligation falling two basis points while the yield on the 30-year muni maturity dropped three basis points.
Treasury bonds were weaker as stock prices fell.
On Wednesday, the 10-year muni-to-Treasury ratio was calculated at 85.2% while the 30-year muni-to-Treasury ratio stood at 99.5%, according to MMD. The muni-to-Treasury ratio compares the yield of tax-exempt municipal bonds with the yield of taxable U.S. Treasury with comparable maturities. If the muni/Treasury ratio is above 100%, munis are yielding more than Treasury; if it is below 100%, munis are yielding less.
COFINA bonds trading weaker
Puerto Rico Sales Tax Financing Corp. issues were trading mostly weaker on Wednesday after the Official Committee of Unsecured Creditors indicated in a court the restructuring deal announced earlier this month lacks support from some key parties.
In midday trading on Wednesday, the COFINA Series 2009A 6.75% first subordinate revenue bonds of 2032 were trading at a high of 48.685 cents on the dollar up from a high of 46.55 cents on Tuesday and down from a high of 50.375 cents on Monday, according to the Municipal Securities Rulemaking Board’s EMMA website. Trading volume totaled $4.195 million in 13 trades compared to $375,000 in five trades on Tuesday and $3.06 million in 10 trades on Monday.
The COFINA Series 2009B 6.35% first subordinate revenue bonds of 2039 were trading at a high of 48.625 cents on the dollar up from a high of 48.25 cents on Tuesday and down from a high of 50 cents on Monday, according to EMMA. Trading volume totaled $21.845 million in 26 trades compared to $7.41 million in 22 trades on Tuesday and $3.815 million in 16 trades on Monday.
The COFINA Series 2009A 5.25% first subordinate revenue bonds of 2027 were trading at a high of 48.375 cents on the dollar, down from a high of 48.5 cents on Tuesday and down from a high of 49.1 cents on Monday, according to EMMA. Trading volume totaled $865,000 in 10 trades compared to $8.6 million in 22 trades on Tuesday and $3.24 million in 25 trades on Monday.
The COFINA Series 2011A-1 5% first subordinate revenue bonds of 2043 were trading at a high of 48 cents on the dollar, down from a high of 49.326 cents on Tuesday and down from a high of 49.75 cents on Monday, according to EMMA. Trading volume totaled $900,000 in 10 trades compared to $6.625 million in 16 trades on Tuesday and $4.865 million in 29 trades on Monday.
The COFINA Series 2007B 6.05% revenue bonds of 2036 were trading at a high of 83.09 cents on the dollar, up from a high of 81.25 cents on Tuesday and down from a high of 83.25 cents on Monday, according to EMMA. Trading volume totaled $3.75 million in 10 trades compared to $490,000 in five trades on Tuesday and $1.015 million in six trades on Monday.
The COFINA Series 2007A 5.25% revenue bonds of 2057 were trading at a high of 83.25 cents on the dollar, up from a high of 83 cents on Tuesday and down from a high of 85 cents on Monday, according to EMMA. Trading volume totaled $10.07 million in nine trades compared to $540,000 in five trades on Tuesday and $3.39 million in six trades on Monday.
Previous session's activity
The Municipal Securities Rulemaking Board reported 39,811 trades on Tuesday on volume of $11.63 billion.
California, Texas and New York were the municipalities with the most trades, with Golden State taking 18.164% of the market, the Lone Star State taking 10.522% and the Empire State taking 9.931%.
Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Ziad Saba at 212-803-6079 for more information.