Prices of top-rated municipal bonds finished stronger on Tuesday, traders, said, with yields on some maturities closing down as much as three basis points.
Meanwhile, more than $3 billion of new issues came to market, led off by big sales from Honolulu, the Illinois Finance Authority and the state of Oregon.
Primary Market
Bank of America Merrill Lynch priced Honolulu's $871.53 million of 2015 Series A through D tax-exempt general obligation bonds. The $380.67 million Series A bonds were priced as 5s to yield from 0.45% in 2016 to 3.15% in 2039; a 2015 maturity was offered as a sealed bid. The $211.45 million Series B bonds were priced as 5s to yield from 1.13% in 2018 to 2.89% in 2031. The $252.11 million Series C bonds were priced to yield from 1.42% with a 4% coupon and a 1.375% coupon in a split 2019 maturity to 3.55% with a 3.50% coupon and 3.34% with a 4% coupon in a split 2033 maturity. The $27.31 million Series D bonds were priced in a 2016 bullet maturity as 5s to yield 0.45%. The bonds are rated Aa1 by Moody's Investors Service and AA-plus by Fitch Ratings.
Goldman, Sachs priced the Illinois Finance Authority's $288.31 million of Series 2015C revenue refunding bonds for the Silver Cross Hospital and Medical Center. The deal was repriced as 5s to yield 0.75% in 2015 to 3.92% in 2030. A 2035 term bond was priced as 5s to yield 4.00%, a 2037 term was priced as 4 1/8s to yield 4.35% and a 2044 term was priced as 5s to yield 4.125%. The bonds are rated Baa1 by Moody's and BBB-plus by Fitch.
Since 2003, the authority was issued roughly $28.68 billion of bonds. The highest years of issuance came in 2007 and 2008 when it sold $4.600 billion and $4.136 billion of bonds, respectively. Since 2010, issuance has been steadily declining, which has resulted in low years of issuance in 2013 and 2014, when they sold just $1.442 billion and $1.092 billion of bonds, respectively.
Goldman also priced the Kentucky Municipal Power Agency's $210.62 million Series 2015A power system revenue refunding bonds for the Prairie State Project. The bonds were priced to yield from 1.04% with a 5% coupon in 2017 to 3.53% with a 5% coupon in 2030; a 2039 term was priced as 4s to yield 4.14% and a 2042 term was priced as 5s to yield 3.875%. The issue is insured by the National Public Finance Guarantee Corp. and rated A3 by Moody's (Baa1 underlying) and AA-minus by Standard & Poor's (A-minus underlying).
Citigroup Global Markets priced Oregon's $254.45 million of GOs, issued under Article XI for state projects, in three series, following a retail order period Monday. The $171.88 Series F bonds were priced as 5s to yield 0.62% in 2017 to 2.94% in 2035 with a 2039 term bond priced as 5s to yield 3.02%.; a 2016 maturity was offered as a sealed bid. The $72.99 million Series H refunding bonds were priced to yield from 1.48% with a 5% coupon in 2020 to 2.48% with a 5% coupon in 2027. The $9.59 million Series I refunding bonds were priced to yield from 1.56% with a 3% coupon in 2020 to 2.51% with a 5% coupon in 2027. The deal is rated Aa1 by Moody's and AA-plus by both S&P and Fitch.
Citi also priced the North Carolina Medical Care Commission's $297.1 million of Series 2015 health care facilities revenue bonds for Vidant Health. The bonds were repriced to yield from 0.40% with a 2% coupon in 2016 to 4.00% with a 4% coupon in 2034; a 2040 term bond was priced as 5s to yield 3.62% and a split 2045 term was priced as 5s to yield 3.67% and as 4s to yield 4.10%. The issue is rated A1 by Moody's and A-plus by S&P.
Morgan Stanley priced the Oklahoma Development Finance Authority's $201.04 million of health system revenue refunding bonds for the Integris Obligated Group. The Series 2015A bonds were priced to yield 0.098% with a 1% coupon in 2015 to 3.35% with a 5% coupon in 2032; a 2038 term was priced as 4s to yield 4.03%. The deal is rated Aa3 by Moody's and AA-minus by S&P.
Morgan Stanley priced the Palomar Community College District, Calif.'s $220 million of Election of 2006 Series C GOs. The bonds were priced to yield from 0.30% with a 2% coupon in 2016 to 3.56% with a 4% coupon in 2036; a 2040 term was priced as 4s to yield 3.63% and a 2044 term was priced as 5s to yield 3.22%. The issue is rated AA2 by Moody's and AA-minus by S&P.
Wells Fargo Securities priced the Board of Regents of the Texas Tech University System's $245.33 million of Series 2015B 17th Series taxable revenue financing system refunding and improvement bonds Series B and B2. The $226.99 million B bonds were priced at par to yield from 0.295% in 2015 to 3.611% in 2029, to yield 3.922% in 2035 and 4.172% in 2045. The $18.35 million Series B2 bonds were priced at to yield from 0.455% in 2016 to 2.104% in 2020 and 2.961% in 2025 and 3.922% in 2033. The bonds are rated Aa1 by Moody's, AA by S&P and AA-plus by Fitch.
Citi priced the Board of Regents of the Texas Tech University System's $72.41 million of Series 2015A 16th Series revenue financing system refunding and improvement bonds. The bonds were priced to yield from 0.20% with a 2% coupon in 2016 to 3.10% with a 5% coupon in 2035; a 2040 term was priced as 3 5/8s to yield 3.73% The bonds are rated Aa1 by Moody's, AA by S&P and AA-plus by Fitch.
In the competitive arena, Baltimore Co., Md., sold $200 million of bond anticipation notes. J.P. Morgan Securities was the apparent winner with a winning bid of 0.1884%. The notes are priced as 1 1/4s to yield 0.17% and rated MIG-1 by Moody's, SP-1-plus by S&P and F-1-plus by Fitch.
Secondary Market
Prices of top-quality municipal bonds ended stronger. The yield on the 10-year benchmark muni general obligation dropped three basis points to 2.09% from 2.12% on Monday, while the yield on 30-year GO declined three basis points to 2.90% from 2.93%, according to the final read of Municipal Market Data's triple-A scale.
Treasury prices were mostly higher on Tuesday. The yield on the two-year Treasury note declined to 0.66% from 0.65% on Monday, while the 10-year yield decreased to 2.06% from 2.10% and the 30-year yield dropped to 2.62% from 2.68%.
The 10-year muni to Treasury ratio was calculated at 101.7% versus 101.0% on Monday, while the 30-year muni to Treasury ratio stood at 110.9% compared to 109.2%.
