Prices of top-quality municipal bonds were stronger at mid-session, traders said, as deals from New York’s Long Island Power Authority, the state of Hawaii, and the city of Chicago were coming to market.
Bank of America Merrill Lynch priced for retail investors LIPA’s $985.3 million of Series 2015 restructuring bonds issued through the Utility Debt Securitization Authority.
The UDSA bonds, due June 15 and Dec. 15, were priced to yield from 1.48% with a 5% coupon in 2023 to 3.39% with a 4% coupon in a split 2037 maturity. No retail orders were taken in the 2028 or 2033 through 2036 maturities.
The deal, which was rated triple-A by Moody’s Investors Service, Standard & Poor’s and Fitch Ratings, is expected to be priced for institutions on Thursday.
Since 1998, LIPA has issued roughly $15.77 billion of debt. The years of 1998 and 2006 saw the most issuance with $6.73 billion and $2.52 billion, respectively. The power authority did not come to market in 1999, 2002, 2005 or 2007. In 2013, LIPA did not come to market, but its conduit issuer UDSA sold $2.1 billion in refunding bonds.
Sources said BAML was also set to price for retail the state of Hawaii’s $747.69 million of Series 2015 general obligation bonds, Series ET, EU, EV, EW, EX, EY, EZ and FA.
The $190 million of series ET bonds were offered in a consensus scale to yield from 0.84% with a 4% coupon in 2018 to 3.48% with a 3.25% coupon in 2032. No retail orders were going to be taken in the 2030-2031 or 2033-2035 maturities. The $35 million of Series EU green bonds were said to yield from 0.84% with a 2% coupon in 2018 to 3.63% with a 3.50% coupon in 2035. The $8.7 million of Series EV bonds were said to be offered as a sealed bid. The $23.645 million of Series EX bonds were said to yield from 1.34% with a 4% coupon in 2020 to 2.28% with a 3% coupon in 2025. The $34.75 million of Series WW bonds, the $213.615 million of Series EY bonds and $216.975 million of Series EZ bonds were not offered to retail investors. The $25 million of Series FA taxable bonds were said to be priced for retail later in the day.
The deal, which was rated Aa2 by Moody’s and AA by S&P and Fitch, will be priced for institutions on Thursday.
Ramirez & Co. priced Chicago’s $439.03 million bonds second lien wastewater transmission taxable revenue and tax-exempt revenue refunding bonds.
The $332.23 million of Series 2008C revenue refunding bonds were priced to yield from 1.37% with a 4% coupon in 2017 to 4.43% with a 5% coupon in 2035; a 2039 maturity was priced as 5s to yield 4.57%.
The $106.795 million of Series 2015 taxable revenue bonds were set to be priced later.
The bonds were rated A by S&P, AA by Fitch and AA-minus by Kroll Bond Rating Agency.
With the tax-exempt bonds, Chicago is refunding $332 million of floating-rate debt from 2008, converting the debt to a fixed-rate and shedding direct purchase agreements. The taxable bonds will repay a line of credit used to cover swap termination payments on derivatives tied to the original transaction.
In the competitive arena, the Washington Suburban Sanitary District, Md., sold $390 million of consolidated public improvement bonds of 2015.
BAML won the bonds with a true interest cost of 3.43%. The issue was priced to yield from 0.18% with a 5% coupon in 2016 to 3.54% with a 4% coupon in 2045. The deal was rated triple-A by Moody’s S&P and Fitch.
Also, the state of Nevada sold $344.88 million of GOs in five separate sales, the largest of which was a $256.3 million offering of Series 2015D limited tax GO capital improvement and refunding bonds.
Citigroup won the Series 2015D bonds with a TIC of 2.43%. The issue was priced to yield from 0.70% with a 5% coupon in 2018 to 3.48% with a 4% coupon in 2035. All the bonds were rated Aa2 by Moody’s, AA by S&P and AA-plus by Fitch.
Secondary Trading
On Wednesday, muni prices were stronger. The yield on the 10-year benchmark muni general obligation was as much as two basis points weaker from 2.04% on Tuesday, while the yield on the 30-year GO was as much as two basis points weaker from 3.09%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were higher on Wednesday, with the yield on the two-year Treasury dropping to 0.56% from 0.62% from Tuesday, while the 10-year yield fell to 2.00% from 2.05% and the 30-year yield decreased to 2.86% from 2.90%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 99.3% versus 97.8% on Friday, while the 30-year muni to Treasury ratio stood at 106.7% compared to 105.9%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 41,201 trades on Tuesday on volume of $5.21 billion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar fell $203.7 million to $10.88 billion on Tuesday. The total is comprised of $3.94 billion competitive sales and $6.94 billion of negotiated deals.
