Prices of top-quality municipal bonds finished weaker on Tuesday, traders said, as some large new deals hit the market from California and Ohio.
The Golden State sold $960.96 million of various purpose general obligation and refunding bonds in three separate competitive sales.
Citigroup won the $532.5 million of Bid Group C tax-exempt various purpose refunding GOs with a true interest cost of 3.44%. The bonds were priced to yield 0.13% with a 5% coupon in 2016 and from 2.40% with a 5% coupon in 2026 to 3.06% with a 5% coupon in 2034.
Goldman Sachs won the $322.5 million of Bid Group B tax-exempt various purpose refunding GOs with a TIC of 1.66%. The bonds were priced to yield from 0.08% with a 4% coupon in 2016 to 2.14% with a 5% coupon in 2025.
JPMorgan Securities won the $105.96 million of Bid Group A taxable various purpose GOs with a TIC of 0.61%. Pricing information was not available.
All three offerings were rated Aa3 by Moody’s Investors Service, AA-minus by Standard & Poor’s and A-plus by Fitch Ratings.
The Buckeye State was also in the competitive arena with the sale of $300 million Series 2015C higher education GOs. Citigroup won the Ohio bonds with a TIC of 3.11%.
The issue was priced to yield from 0.32% with a 2% coupon in 2016 to 3.01% with a 5% coupon in 2035. The bonds were rated Aa1 by Moody’s and AA-plus by S&P and Fitch.
This week, the New York City Transitional Finance Authority is coming to market with the biggest offering -- $1 billion of bonds altogether, consisting of a large negotiated deal and two smaller competitive sales.
On Tuesday, JPMorgan held the second day of a two-day retail order period for the TFA’s $749.28 million of future tax secured subordinate bonds with no changes to the scale that was set on Monday. The deal is scheduled to be priced for institutions on Wednesday.
The $350 million of Fiscal 2016 Subseries B-1 bonds were priced for retail as 5s to yield 3.19% in 2035 and as 3 5/8s to yield 3.67% in 2039; no retail orders were taken in the 2028-2034 or 2036-2038 maturities.
The $346.94 million of Fiscal 2016 Series C bonds were priced for retail to yield from 0.83% with a 5% coupon in 2018 to 3.13% with a 3% coupon in 2030; a 2017 maturity was offered as a sealed bid.
The $52.34 million of Fiscal 2016 Series D bonds were priced for retail to yield from 0.83% with a 3% coupon in 2018 to 3.13% with a 3% coupon in 2030; the 2016 and 2017 maturities were offered as sealed bids.
These bonds were rated Aa1 by Moody’s and triple-A by both S&P and Fitch.
On Wednesday, the TFA will offer $250 million of bonds in two competitive sales consisting of $198.32 million of Series B, Subseries B-2 taxable bonds and $51.69 million of Series B, Subseries B-3 taxable bonds. These bonds were rated triple-A by Fitch.
Since 1995, the TFA has issued about $39.32 billion of debt. The years of 2011 and 2012 saw the most issuance with $6.05 billion and $5.66 billion, respectively. The lowest years of issuance were in 2006 and 2008, when the authority sold $1.45 billion and $1.32 billion of bonds, respectively.
Bank of America Merrill Lynch priced the South Carolina State Port Authority’s $292.52 million of Series 2015 revenue bonds, subject to the alternative minimum tax. The bonds were priced to yield from 2.99% with a 5% coupon in 2026 to 4.01% with a 4% coupon in 2035. A 2040 maturity was priced as 4s to yield 4.13%, a split 2045 maturity was priced as 4s to yield 4.19% and as 5s to yield 3.97%; a 2050 maturity was prices as 5 1/4s to yield 4.07% and a 2055 maturity was priced as 5 1/4s to yield 4.25%. The issue was rated A1 by Moody’s and A-plus by S&P.
Secondary Market
The yield on the 10-year benchmark muni general obligation was one basis point stronger at 2.03% from 2.02% on Monday, while the yield on the 30-year GO was one basis point stronger at 3.08% from 3.07%, according to the final read of Municipal Market Data's triple-A scale.
Treasury prices were also lower on Tuesday, with the yield on the two-year Treasury gaining to 0.63% from 0.60% on Monday, while the 10-year yield rose to 2.07% from 2.02% and the 30-year yield increased to 2.92% from 2.88%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 96.6% versus 99.7% on Monday, while the 30-year muni to Treasury ratio stood at 104.7% compared to 106.6%, according to MMD.
