Prices of top-shelf municipal bonds closed stronger on Wednesday, traders said, as the New York City Transitional Finance Authority got a warm reception for its big negotiated deal and two smaller competitive sales.
JPMorgan Securities priced and repriced the TFA’s $750 million of future tax-secured tax-exempt subordinate bonds for institutions after holding a two-day retail order period.
The $350 million of Fiscal 2016 Subseries B-1 bonds were priced to yield from 2.73% with a 5% coupon in 2028 to 3.68% with a 3.625% coupon in 2039.
The $362.03 million of Fiscal 2016 Series C bonds were priced to yield from 0.55% with a 5% coupon in 2017 to 3.14% with a 3% coupon in 2030.
The $37.98 million of Fiscal 2016 Series D bonds were priced to yield from 0.22% with a 1.50% coupon in 2016 to 2.62% with a 5% coupon in 2027.
“We saw strong demand, assisted in part by a muni bond market rally [on Wednesday],” Alan Anders, Deputy Director of New York City’s Office of Management and Budget, told The Bond Buyer in an emailed statement. “The amount of bonds offered were three times oversubscribed by institutional orders…enabling us to reduce yields in 10 maturities by up to six basis points.”
The TFA also sold $250 million of bonds in two competitive sales.
RBC Capital Markets won the $198.62 million of Series B, Subseries B-2 taxable bonds with a true interest cost of 2.60%. The issue was priced at par to yield from 1.05% in 2017 to 3.15% in 2025.
Wells Fargo Securities won the $48.34 million of Series B, Subseries B-3 taxable bonds with a TIC of 3.498%. The issue was priced as 3.45s to yield 3.30% (127 basis points above the comparable Treasury security) in 2026 and 3.45% in 2027 (142 basis points above the comparable Treasury security).
The TFA issues were rated Aa1 by Moody’s Investors Service and triple-A by both Standard & Poor’s and Fitch Ratings.
Bank of America Merrill Lynch priced Harris County, Texas’ $329.29 million bond offering.
The $49.995 million of Series 2015B permanent improvement refunding bonds were priced as 5s to yield from 0.60% in 2017 to 1.79% in 2022, and from 2.26% in 2025 to 2.51% in 2027; a 2016 maturity was offered as a sealed bid. The $203.15 million of Series 2015A unlimited tax road refunding bonds were priced as 5s to yield from 2.26% in 2025 to 2.81% in 2031; a 2016 maturity was offered as a sealed bid.
The $46.92 million of Series 2015A flood control district improvement refunding bonds were priced to yield from 2.51% with a 5% coupon in 2027 to 3.20% with a 3% coupon in 2030. The $29.24 million of Series 2015B flood control district contract tax refunding bonds were priced to yield from 2.61% with a 5% coupon in 2028 to 3.20% with a 3% coupon in 2030.
The issue was rated triple-A by Moody’s and S&P.
Morgan Stanley priced the California Health Facilities Financing Authority’s $189.17 million of Series 2015A refunding revenue bonds for Sutter Health. The issue was priced as 4s to yield 3.95% in 2040 and as 5s to yield 3.55% in 2043. The bonds were rated Aa3 by Moody’s and AA-minus by S&P and Fitch.
On Thursday, Citigroup is set to price the New Jersey Turnpike Authority’s $750 million of revenue bonds. The deal is rated A3 by Moody’s, A-plus by S&P and A by Fitch.
Since 1995, the NJTA has issued over $10 billion of debt. The authority sold the most bonds in 2009 and 2013, when they issued $2.5 billion and $2.1 billion, respectively. The NJTA did not sell any debt from 2006 through 2009 or in 2011.
Secondary Market
Municipal bond prices finished stronger on Wednesday. The yield on the 10-year benchmark muni general obligation was one basis point weaker at 2.02% from 2.03% on Tuesday, while the yield on the 30-year GO was two basis point weaker at 3.06% from 3.08%, according to the final read of Municipal Market Data's triple-A scale.
Treasury prices were higher on Wednesday, with the yield on the two-year Treasury slipping to 0.62% from 0.63% on Tuesday, while the 10-year yield fell to 2.02% from 2.07% and the 30-year yield decreased to 2.87% from 2.92%.
The 10-year muni to Treasury ratio was calculated on Wednesday at 99.6% versus 96.6% on Tuesday, while the 30-year muni to Treasury ratio stood at 106.7% compared to 104.7%, according to MMD.
