Prices of top-rated municipal bonds closed stronger, according to traders, as yields on some maturities fell by two basis points on the intermediate and long ends.
In the primary market, deals by the Port Authority of New York and New Jersey and the New York City Transitional Finance Authority were priced for retail investors.
Secondary Market
The yield on the 10-year benchmark muni general obligation dropped two basis points to 1.95% from 1.97% on Monday, while the yield on the 30-year GO declined two basis points to 2.82% from 2.84%, according to the final read of Municipal Market Data's triple-A scale.
"Municipal bond yields edged lower," according to Interactive Data, "with light to moderate secondary trading activity."
Treasury prices also rose on Tuesday as the yield on the two-year Treasury note fell to 0.51% from 0.54% on Monday, while the 10-year yield dropped to 1.89% from 1.94% and the 30-year yield decreased to 2.54% from 2.58%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 102.5% versus 101.8% on Monday, while the 30-year muni to Treasury ratio stood at 110.8% compared to 110.0%.
Primary Market
In the negotiated sector, Bank of America Merrill Lynch priced the Port Authority of New York and New Jersey's $775 million of consolidated bonds for retail investors ahead of the institutional pricing on Wednesday.
The $125 million of 188 Series consolidated alternative minimum tax bonds were priced to yield from 0.56% with a 5% coupon in 2018 to 2.62% with a 5% coupon in 2025. No retail orders were taken in 2026-2035 maturities. The 2015 and 2016 maturities were offered as sealed bids.
The $550 million of 189 Series consolidated tax-exempt bonds were priced to yield from 0.51% with a 4% coupon in 2017 to 3.42% with a 3.25% coupon in 2033. A term bond in 2045 was priced as 5s to yield 3.22%. No retail orders were taken for the 2027, 2028, 2030-2032, 2034-2035 and then 2040 maturities. The 2016 maturity was offered as a sealed bid.
The $100 million of 190 Series consolidated tax exempt bonds were priced as 5s to yield 1.79% in 2026 and 1.90% in 2027. No retail orders were taken for the 2028-2045 maturities.
The issue is rated Aa3 by Moody's Investors Service and AA-minus by Standard & Poor's and Fitch Ratings.
"The Port Authority's excellent credit quality stems from its disciplined approach to financial management," said a Port Authority spokesperson, "which produces strong liquidity and debt service coverage, and benefits from the diversity of its operations and the vital role the Port Authority plays in moving people and goods throughout the New York and New Jersey region."
Proceeds will be used to refund approximately $525 million of consolidated bonds and to fund its ongoing capital program.
The Port Authority has sold roughly $31.29 billion of bonds since 1995, with the lowest issuance years coming in 2000 and 2001, when the authority sold $500 million and $650 million, respectively. The years that the authority issued the most debt were 2012 and 2014, when it came to market with $3.70 billion and $2.88 billion, respectively.
The Port Authority was last in the market in in October 2014 when it sold $650 million of consolidated bonds. The PANYNJ said the proceeds of that sale were used to refund about $300 million of consolidated bonds and to fund the authority's ongoing capital program. Wells Fargo was the lead manager on the deal.
Loop Capital Markets held the first of a two-day retail order period on the New York City Transitional Finance Authority's $650 million of Fiscal 2015 Subseries E-1 future tax secured subordinate bonds.
The bonds were priced to yield 0.87% with 1%, 3% and 5% coupons in a 2018 triple split maturity to 3.02% with a 5% coupon in 2033. A 2042 split maturity was priced as 3 5/8s to yield 3.70% and as 5s to yield 3.21%. No retail orders were taken in 2030, 2031, 2034, 2035 and 2041. A 2017 maturity was offered as a sealed bid.
Another retail order period will be held Wednesday and the institutional pricing is slated for Thursday. The bonds are rated Aa1 by Moody's and triple-A by S&P and Fitch.
In the competitive arena, the Florida Board of Education sold $258.50 million of 2015 Series D public education capital outlay refunding bonds. Goldman, Sachs won the issue with a true interest cost of 1.2824%. The bonds were priced as 5s to yield from 0.27% in 2016 to 1.71% in 2022. The bonds are rated Aa1 by Moody's and triple-A by S&P and Fitch.
The Florida BOE was last in the market on March 3 when it sold $231.83 million of 2015 Series B public education capital outlay refunding bonds to JPMorgan with a TIC of 2.1872%.
The Boulder Valley School District Number RE-2, Colo., competitively sold $250 million of Series 2015 general obligation bonds. Morgan Stanley won the issue with a TIC of 2.8571%. The bonds were priced to yield 0.45% with a 5% coupon in 2016 and 0.80% with a 5% coupon in 2017 and from 2.94% with a 5% coupon in 2035 to 3.63% with a 4% coupon in 2044. The deal is rated Aa1 by Moody's, AA by S&P and AA-plus by Fitch.
Boulder Valley last sold bonds competitively on Sept. 9, 2009, when Morgan Stanley won $54 million of Series 2009B GO refunding bonds with a TIC of 2.5553%.
