Prices of top-rated municipal bonds closed higher on Tuesday, traders said, with yields on some maturities falling by as much as two basis points.
In the primary, the first wave of the week's new issue volume hit the market as the New York State Dormitory Authority's $1.33 billion of sales tax revenue bonds were priced for retail investors while several large competitive deals were sold.
Secondary Market
The yield on the 10-year benchmark muni general obligation finished down two basis points to 2.27% from 2.29% on Monday, while the yield on the 30-year GO was off one basis point to 3.24% from 3.25%, according to the final read of Municipal Market Data's triple-A scale.
Treasury prices were also higher on Tuesday, with the yield on the two-year Treasury note dropping to 0.68% from 0.70% on Monday, while the 10-year yield decreasing to 2.34% from 2.37% and the 30-year yield declined to 3.08% from 3.10%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 96.9% versus 96.6% on Monday, while the 30-year muni to Treasury ratio stood at 105.2%, compared with 104.7%, according to MMD.
Primary Market
Morgan Stanley priced DASNY's $1.33 billion of Series 2015A New York State sales tax revenue bonds for retail investors ahead of the institutional pricing on Wednesday.
The bonds were priced for retail to yield from 0.59% with 2%, 3% and 5% coupons in a triple-split 2017 maturity to 2.55% with a 5% coupon in 2026. The 2016 maturity was offered as a sealed bid. The issue was rated triple-A by Standard & Poor's and AA-plus by Fitch Ratings.
Morgan Stanley also priced the Port of Seattle, Wash.'s $585.88 million of intermediate lien revenue bonds.
The offering consists of Series 2015A non-AMT, Series 2015B non-AMT and Series C AMT bonds. The $73.19 million of Series 2015A bonds were priced to yield from 1.08% with 3% and 5% coupons in a split 2018 maturity to 3.58% with a 5% coupon in 2035; a 2040 term was priced as 5s to yield 3.75%. The $285.45 million of Series 2015B bonds were priced as 2s to yield 0.25% in 2016 and as 5s to yield from 0.69% in 2017 to 3.58% in 2035. The $227.25 million of Series 2015C bonds were priced as 2s to yield 0.38% in 2016 and as 5s to yield from 0.85% in 2017 to 3.96% in 2035; a 2040 term bond was priced as 5s to yield 4.06%. The issue was rated A1 by Moody's Investors Service and A-plus by S&P and Fitch.
Bank of America Merrill Lynch priced Chattanooga, Tenn.'s $260.84 million of Series 2015A tax-exempt, Series 2015B taxable and Series 2015C tax-exempt electric system refunding revenue bonds. The $219.49 million of Series 2015A bonds were priced to yield from 0.71% with a 4% coupon in 2017 to 3.42% with a 4% coupon in 2033. The $15.36 million of Series 2015B bonds were priced at par to yield from 0.70% in 2016 to 3.375% in 2025. The Series 2015C bonds were priced to yield from 1.71% with a 5% coupon in 2021 to 3.17% with a 5% coupon in 2035; a 2040 term bond was priced as 5s to yield 3.35%. The issue was rated AA-plus by S&P and Fitch.
JPMorgan priced the Board of Regents of the University of Texas Systems' $218.24 million of Series 2015B permanent university fund bonds to yield from 0.71% with a 4% coupon in 2017 to 3.65% with a 3.5% coupon in 2035. The 2016 maturity was offered as a sealed bid. The issue was rated triple-A by Moody's Investors Service, S&P and Fitch.
In the competitive arena, the Metropolitan Government of Nashville and Davidson County, Tenn., sold $347.46 million of Series 2015C general obligation improvement bonds.
Morgan Stanley won the deal with a true interest cost of 3.18%. The issue was priced to yield from 0.70% with a 5% coupon in 2017 to 3.43% with a 4.50% coupon in 2034. The bonds were rated Aa2 by Moody's and AA by S&P.
Before this sale, the city last sold comparable bonds competitively on March 4, 2008, when Merrill Lynch won $308 million of Series 2008 GOs with a true interest cost of 4.76%.
Since 1995, Nashville and Davidson County has issued roughly $5.31 billion of general obligation debt. The years of 2010 and 2013 saw the most issuance, with roughly $892 million and $620 million, respectively. The music city and Davidson counties did not come to market with GO issuance in 1998, 2000, 2009 or 2014.
The Miami-Dade County School Board, Fla., sold $199.57 million of Series 2015 GO school bonds.
Bank of America Merrill Lynch won the deal with a true interest cost of 3.89%. The bonds were priced to yield from 0.19% with a 5% coupon in 2016 to 3.89% with a 4% coupon in 2036; a 2039 term bond was priced at par to yield 4% while a 2045 term was priced at par to yield 4.25%. The issue was rated Aa3 by Moody's and A-plus by S&P.
Before this sale, the district last sold comparable bonds competitively on July 10, 2013, when JPMorgan won $109 million of Series 2013 GO school bonds with a TIC of 4.54%.
The state of New Mexico sold $198.95 million of severance tax bonds in two separate sales.
Barclays Capital won the $129.2 million of Series 2015A severance tax bonds with a TIC of 2.04%. The issue was priced as 5s to yield from 0.25% in 2016 to 2.44% in 2025. The bonds were rated Aa1 by Moody's and AA by S&P.
Barclays also won the $69.75 million of Series 2015B supplemental severance tax bonds with a TIC of 2.08%. The issue was priced as 5s to yield from 0.30% in 2016 to 2.54% in 2025. The bonds were rated Aa2 by Moody's and AA-minus by S&P.
Before this sale, the state last sold comparable bonds competitively on May 20, 2014, when JPMorgan won $143.77 million of Series 2014A severance tax bonds with a TIC of 2.35%.
