Prices of top-shelf municipal bonds closed weaker in secondary trading on Wednesday, traders said, as the state of Minnesota sold more than $1 billion of bonds in the competitive arena.
Secondary Market
The yield on the 10-year benchmark muni general obligation on Wednesday rose three basis points to 2.24% from 2.21% on Tuesday, while the yield on the 30-year GO rose three basis points to 3.13% from 3.10%, according to the final read of Municipal Market Data's triple-A scale.
Treasury prices were lower on Wednesday, with the yield on the two-year Treasury note rising to 0.73% from 0.72% on Tuesday, while the 10-year yield rose to 2.27% from 2.21% and the 30-year yield increased to 2.94% from 2.89%.
The 10-year muni to Treasury ratio was calculated on Wednesday at 98.9% versus 100.1% on Tuesday, while the 30-year muni to Treasury ratio stood at 106.5% compared to 107.5%, according to MMD.
Primary Market
Minnesota competitively sold five separate offerings totaling over $1 billion.
Barclays Capital won the $386.50 million of Series 2015D general obligation state various purpose refunding bonds with a true interest cost of 2.18%. The bonds were priced as 5s to yield from 0.25% in 2016 to yield 2.51% in 2027.
Citigroup won the $368.23 million of Series 2015A GO state various purpose refunding bonds with a TIC of 2.93%. The bonds were priced to yield from 0.254% with a 2% coupon in 2016 to 2.94% with a 5% coupon in 2035.
Bank of America Merrill Lynch won the $310 million of Series 2015B GO state trunk highway bonds with a TIC of 2.88%. The bonds were priced to yield from 0.27% with a 3% coupon in 2016 to 3.46% with a 3.375% coupon in 2035.
Robert W. Baird won the $14.89 million of Series 2015E GO state trunk highway refunding bonds with a TIC of 2.14%. Pricing information was not available.
Wells Fargo Securities won the $7.2 million of Series 2015C taxable GO state various purpose bonds with a TIC of 2.43%. The bonds were priced to yield from 0.45% with a 1% coupon in 2016 to 3.00% at par in 2025.
All the issues were rated Aa1 by Moody's Investors Service and AA-plus by Fitch Ratings.
The bond proceeds will be used to finance infrastructure work across the state as well as for transportation-related projects. The bonds will also refund some outstanding debt. Public Resources Advisory Group was the financial advisor and Kutak Rock was bond counsel. The state expected net present value savings of about $44 million on the refunding series, a finance official told The Bond Buyer ahead of the sale.
Since 1995, the state has issued roughly $17.14 billion of debt. The years of 2009 and 2010 saw the most issuance with $1.71 billion and $1.77 billion, respectively. The North Star State had low issuance years of 1997 and 1999, when they came to market with $226 million and $185 million, respectively.
Elsewhere in Minnesota, Citi priced the city of Minneapolis' $112.59 million of Series 2015A healthcare system revenue bonds for Fairview Health Services. The bonds were priced to yield from 0.60% with a 2% coupon in 2016 to 3.66% with a 5% coupon in 2034; a 2040 term was priced as 4s to yield 4.10% and a 2044 term was priced as 5s to yield 3.90%. The issue is rated A2 by Moody's and A-plus by S&P.
Loudoun County, Va., competitively sold $117.24 million of Series 2015 water and sewer system revenue and refunding bonds. JPMorgan won the bonds with a TIC of 3.39%. The bonds were priced to yield from 0.16% with a 2% coupon in 2016 to 3.65% with a 4% coupon in 2039; a 2042 term was priced as 4s to yield 3.72% and a 2045 term was priced as 4s to yield 3.75%. The issue is rated triple-A by Moody's, Standard & Poor's and Fitch.
In the negotiated sector, FirstSouthwest received the official award on the $164.58 million Denton Independent School District, Texas' Series 2015A unlimited tax school building bonds. The issue was priced to yield from 0.30% with a 2% coupon in 2016 to 3.14% with a 5% coupon in 2035; a 2040 term bond was priced as 5s to yield 3.28% and a 2045 term was priced as 5s to yield 3.35%. The issue was backed by the Texas Permanent School Fund guarantee program, and rated triple-A by S&P and Fitch.
Wells Fargo received the official award on the Hillsborough County School Board, Fla.'s $100.63 million of master lease program refunding certificates of participation. The COPs were priced to yield from 0.46% with a 2% coupon in 2016 to 3.65% with a 3.50% coupon and 3.39% with a 5% coupon in a split 2031 maturity. The issue was rated Aa2 by Moody's, AA-minus by S&P and AA by Fitch.
Bank of America Merrill Lynch priced the Wyoming Community Development Authority's $114.33 million of housing revenue bonds in three series. The $47.57 million of Series 2015-4 AMT bonds, due June 1 and Dec. 1, were priced at par to yield from 0.70% and 0.80% in a split 2016 maturity to 3.45% and 3.50% in a split 2025 maturity; a 2030 term bond was priced at 100.25 to yield 4%. The $18.76 million of Series 2015-5 non-AMT bonds, due June 1 and Dec. 1, were priced at par to yield 2.45% and 2.55% in a split 2022 maturity to 3.30% in 2027; a 2030 term was priced as 3 5/8s to yield 3.70% and a 2034 term was priced at par to yield 3.90%. The $48 million of Series 2015-6 non-AMT bonds were priced as 3 5/8s to yield 3.70% on Dec. 1, 2030, at par to yield 3.90% on Dec. 1, 2034 and as 4s to yield 2% on June 1, 2045. The issue was rated Aa1 by Moody's and AA-plus by S&P.
