Prices of top-rated municipal bonds finished mostly stronger on Thursday, traders said, as several big deals hit the screens.
The tax-exempt portion of Chicago's $1.09 billion of general obligation bonds was priced, while more than $1 billion of taxable notes were offered for the Indiana Toll Road, and Maryland sold $500 million of GOs in the competitive arena.
Primary Market
On Thursday, Morgan Stanley priced Chicago's $347 million of Series 2015A tax-exempt GOs. The tax-exempts were priced to yield from 3.90% with a 5% coupon in 2019 to 5.09% with a 5% coupon in 2024; from 5.29% with a 5% coupon in 2026 to 5.53% with a 5.375% coupon in 2029; from 5.64% with a 5.50% coupon in 2031 to 5.67% with a 5.50% coupon in 2035; and a 2039 term was priced as 5 1/2s to yield 5.69%.
The city's $742.86 million of Series 2015B taxable GOs were priced at par to yield 5.383% in 2019, or 375 basis points above the comparable Treasury security; 5.633% in 2020, 400 basis points above the comparable Treasury; 5.962% in 2021, 390 basis points above the comparable Treasury; 6.212% in 2022, 415 basis points above the comparable Treasury; and 6.361% in 2023, 400 basis points above the comparable Treasury. A 2033 term bond was priced as 7 3/8s to yield 7.45% and a 2042 term was priced as 7 3/4s to yield 7.98%. The terms were priced with the average life of 15.422 years for the 2033 and 20.787 years for the 2042.
The deal's taxable piece was so large due to the city's plan to use proceeds to cover short-term operating expenses that would run afoul of long-term tax-exempt financing rules under the Internal Revenue Service code.
Both series were rated BBB-plus by Standard & Poor's and Fitch Ratings and A-minus by Kroll Bond Rating Agency.
Bank of America Merrill Lynch priced the Indiana Toll Road ITR Concession Co.'s $1.05 billion of taxable senior secured notes.
The notes were all priced at par to yield 4.197% in 2025, 185 basis points above the comparable Treasury; to yield 5.183% in 2035, 205 basis points above the comparable Treasury; and to yield 5.283% in 2040, 215 basis points above the comparable Treasury. The deal is rated triple-B by S&P and Fitch.
Morgan Stanley priced the Louisiana Citizens Property Insurance Corp.'s $335.03 million of Series 2015 assessment revenue bonds.
The bonds were priced as 5s to yield from 1.02% in 2017 to 2.70% in 2022. The 2016 maturity was offered as a sealed bid.
The issue was rated A1 by Moody's, A by S&P and A-minus by Fitch except for the 2021 and 2022 maturities, which totaled $106.515 million are insured by Assured Guaranty and carry ratings of A2 from Moody's and AA from S&P.
In the competitive arena on Thursday, Maryland sold $500 million of GOs in two separate sales. Both issues were rated triple-A by Moody's Investors Service, S&P and Fitch.
JPMorgan won the $450 million of Second Series A tax-exempt state and local facilities loan of 2015 GOs with a true interest cost of 2.83%. The bonds were priced to yield from 1.10% with a 5% coupon in 2019 to 3.25% with a 3.25% coupon in 2030.
JPMorgan also won the $50 million of Second Series B taxable state and local facilities loan of 2015 GOs with a true interest cost of 1.35%. No pricing information was available.
The proceeds of the tax-exempts will be used to finance capital projects such as educational facilities and hospitals. The taxable bond proceeds will mainly be used to support housing, community development and water-quality financing programs.
The Old Line State last sold comparable tax-exempt bonds competitively on March 4, when bank of America Merrill Lynch won $518 million of First Series A tax-exempt state and local facilities loan of 2015 GOs with a TIC of 2.65%.
Stillwater Independent School District No. 834, Minn., sold two competitive sales totaling roughly $112.31 million of GOs. Both deals were rated Aa2 by Moody's.
The $97.57 million of Series 2015A GO school building bonds were won by Piper Jaffray with a TIC of 3.03%. The bonds were priced to yield from 0.90% with a 5% coupon in 2018 to 3.75% with a 4% coupon in 2037.
The $14.81 million of Series 2015B GO taxable OPEB refunding bonds were won by Wells Fargo with a TIC of 1.42%. The taxables were priced at par to yield 0.70% in 2017, 1.15% in 2018 and 1.55% in 2019.
Secondary Market
The yield on the 10-year benchmark muni general obligation on Thursday closed down one basis point at 2.31% from 2.32% on Wednesday, while the yield on the 30-year GO was off one basis point to 3.27% from 3.28%, according to the final read of Municipal Market Data's triple-A scale.
Treasury prices were mixed on Thursday, with the yield on the two-year Treasury note rising to 0.66% from 0.63% on Wednesday, while the 10-year yield rose to 2.36% from 2.35% and the 30-year yield fell to 3.12% from 3.13%.
The 10-year muni to Treasury ratio was calculated on Thursday at 98.2% versus 100.0% on Wednesday, while the 30-year muni to Treasury ratio stood at 105.0% compared to 107.1%, according to MMD.
Tax-Exempt Money Market Funds Post Outflows
Tax-exempt money market funds experienced outflows of $743.4 million, bringing total net assets to $246.48 billion in the period ended July 13, according to The Money Fund Report, a service of iMoneyNet.com. This followed an inflow of $5.15 billion to $247.22 billion in the previous week.
The average, seven-day simple yield for the 389 weekly reporting tax-exempt funds remained at 0.01% for a 115th straight week.
The total net assets of the 988 weekly reporting taxable money funds fell $3.93 billion to $2.399 trillion in the period ended July 14, after experiencing an inflow of $8.06 billion to $2.403 trillion in the prior week.
The average, seven-day simple yield for the taxable money funds remained at 0.02% for the 26th consecutive week.
Overall, the combined total net assets of the 1,377 weekly reporting money funds decreased $4.67 billion to $2.645 trillion in the period ended July 14, which followed an inflow of $13.57 billion to $2.650 trillion the week before.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 39,879 trades on Wednesday on volume of $9.608 billion.
The most active bond, based on the number of trades, was the Lehigh County General Purpose Authority, Pa., Series 2015A hospital revenue 4 1/4s of 2045, which traded 251 times at an average price of 98.813, an average yield of 4.315%. The bonds were initially priced at 97.352 to yield 4.41%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $2.39 billion to $9.99 billion on Thursday. The total is comprised of $2.67 billion competitive sales and $7.32 billion of negotiated deals.
