Top-shelf municipal bond yields weakend as much as four basis pointsas the market got its first dose of issuance for the week, with negotiated and competitive offerings from issuers in New York, Washington, Ohio and Maryland.
Primary market

RBC Capital Markets priced the New York City Transitional Finance Authority’s $839.035 million of future tax secured subordinated bonds for institutions on Tuesday after holding a two-day retail order period.

The $800 million of Fiscal 2017 Series E Subseries E-1 tax-exempt bonds were priced for institutions to yield from 1.18% with a 4% coupon in 2020 to 3.22% with a 5% coupon in 2040. The bonds were also priced to yield from 3.25% with a 5% coupon in 2043 to 3.712% with a 3.625% coupon in 2045. The 2019 maturity was offered as sealed bid.

The $39.035 million of Fiscal 1999 Series A Subseries A-2 tax-exempt bonds were priced for institutions to yield 1.15% with a 3% coupon, 4% coupon and 5% coupon in a triple-split 2019 maturity. The bonds are rated Aa1 by Moody’s Investors Service and AAA by S&P Global Ratings and Fitch Ratings.

Also on Tuesday, the TFA competitively sold $300 million of taxable bonds in two sales. The $234.21 million of future tax secured subordinate bonds, Fiscal 2017, Subseries E-2 was won by RBC Capital Markets with a TIC of 2.84%. No other pricing information was immediately available.

The $65.79 million of future tax secured subordinate bonds, Fiscal 2017, Subseries E-3 were on won by FTN Financial Capital Markets with a true interest cost of 3.43%.

JPMorgan Securities priced Energy Northwest’s $589.765 million of electric revenue refunding tax-exempt and taxable bonds for retail investors on Tuesday.

The $238.51 million of Series 2017A Project 1 bonds were priced for retail to yield from 2.30% with a 5% coupon and 1.85% with a 5% coupon in a split 2026 maturity to 2.53% with a 5% coupon and 1.93% with a 5% coupon in a split 2028 maturity.

The $188.995 million of Series 2017A Columbia Generating Station bonds were priced for retail to yield from 1.43% with a 4% coupon in 2021 to 2.01% with a 5% coupon in 2024. The bonds were also priced to yield 2.63% with a 5% coupon in 2029 and to yield from 2.94% with a 5% coupon in 2033 to 3.05% with a 5% coupon in 2035. The 2018 maturity was offered as a sealed bid.

The $155.065 million of Series 2017A Project 3 bonds were priced for retail to yield 2.16% with a 5% coupon in 2025 and to yield 2.53% with a 5% coupon in 2028. The 2018 maturity was offered as a sealed bid.

The $1.730 million of Series 2017B Project 1 taxable bonds were priced for retail at par to yield 2.943% in 2025. The 2020 maturity was not available for retail customers.

The $3.805 Series 2017B Columbia Generating Station taxable bonds were priced for retail at par to yield 1.895% in 2020. The 2029 maturity was not available for retail customers.

The $1.660 million of Series 2017B Project 3 taxable bonds were priced for retail at par to yield 1.895% in 2020 and 2.943% in 2025. The deal is expected to also price for institutions later on in the day and is rated Aa1 by Moody’s, AA-minus by S&P and AA by Fitch.

JPMorgan also priced the Miami-Dade County Health Facilities Authority, Fla.’s $152.995 million of Series 2017 hospital revenue and revenue refunding bonds for the Nicklaus Children’s Hospital. The bonds were priced to yield from 1.98% with a 5% coupon in 2022 to 3.60% with a 5% coupon in 2037. A term bond in 2042 was priced to yield 4.05% with a 4% coupon and 3.62% with a 5% coupon in a split maturity. A term bond in 2047 was priced to yield 4.08% with a 4% coupon and 3.71% with a 5% coupon in a split 2047 maturity. The deal is rated A-plus by S&P and Fitch.

Piper Jaffray priced the Palomar Community College District, San Diego, Calif.’s $102.240 million of 2017 general obligation refunding bonds on Tuesday. The bonds were priced to yield from 2.94% with a 5% coupon in 2033 to 3.05% with a 5% coupon in 2035. A term bond in 2045 was priced to yield 3.65% with a 4% coupon. The deal is rated Aa1 by Moody’s and AA by S&P.

In the competitive arena on Tuesday, Howard County, Md., sold $358.76 million of bonds in three separate sales.
The $145.45 million of Series 2017B consolidated public improvement refunding bonds were won by Citi with a TIC of 2.24%. No other pricing information was immediately available.

The $133.57 million of Series 2017A consolidated public improvement project bonds were won by BAML with a TIC of 2.95%. The bonds were priced to yield from 0.83% with a 5% coupon in 2018 to 3.26% with a 4% coupon in 2037.

The $79.75 million of Series 2017C metropolitan district project and refunding bonds were won by Barclays with a TIC of 3.11%. All three deals are rated triple-A by Moody’s, S&P and Fitch. The bonds were priced to yield from 0.84% with a 5% coupon in 2018 to 3.56% with a 3.50% coupon in 2047.

The state of Ohio sold $300 million of higher education general obligation bonds which were won by Bank of America Merrill Lynch with a TIC of 3.31%. The bonds were priced to yield from 1.05% with a 5% coupon in 2019 to 2.91% with a 5% coupon in 2037. The deal is rated Aa1 by Moody’s and AA-plus by S&P and Fitch.

Since 2007, the Buckeye state has sold over $11 billion of debt, with the most issuance occurring in 2008 when it sold $2.13 billion of securities. It sold the least amount of bonds in 2013 when it offered $258.6 million of debt.

Secondary market

Top rated municipal bonds were stronger on Tuesday, as the yield on the 10-year benchmark muni general obligation was between two and four basis points lower from 2.17% on Monday, while the 30-year GO yield was down between one and three basis points from 2.97%, according to a read of Municipal Market Data's triple-A scale.

U.S. Treasuries were also stronger on Tuesday. The yield on the two-year Treasury declined to 1.23% from 1.27% on Monday, while the 10-year Treasury yield dropped to 2.29% from 2.36%, and the yield on the 30-year Treasury bond decreased to 2.93% from 2.99%.

On Monday, the 10-year muni to Treasury ratio was calculated at 91.9% compared to 91.4% on Friday, while the 30-year muni to Treasury ratio stood at 99.3%, versus 99.1%, according to MMD.

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Aaron Weitzman

Aaron Weitzman

Aaron Weitzman is a markets reporter for The Bond Buyer, focusing on the sell side of the municipal bond market.
Chip Barnett

Chip Barnett

Chip Barnett is a journalist with more than 40 years of experience. Barnett is currently Senior Market Reporter for The Bond Buyer.