Prices of top rated municipal bonds closed lower on Wednesday, traders said, with yields on some maturities rising by as much as three basis points.
In the primary, Atlanta sold $252 million of general obligation bonds in the competitive arena while Miami-Dade County came to market with a $538 million negotiated deal.
Secondary Market
The yield on the 10-year benchmark muni general obligation rose two basis points to 2.38% from 2.36% on Tuesday, while the yield on the 30-year GO increased three basis points to 3.36% from 3.33%, according to the final read of Municipal Market Data's triple-A scale.
Since the start of the month muni yields have been rising. Yields on the 10-year muni are up by 16 basis points since June 1 while the 30-year muni yield is up by 17 basis points.
Puerto Rico paper was active and trading lower by as much as $2 in price on the long-dated uninsured bonds, according to Interactive Data.
Among securities tracked by Market, the Puerto Rico commonwealth 8s of 2035 were yielding 10.15% on Wednesday compared to 10.01% in the previous session.
Treasury prices were lower as well on Wednesday with the yield on the two-year Treasury note rising to 0.73% from 0.70% on Tuesday, while the 10-year yield increased to 2.47% from 2.41% and the 30-year yield rose to 3.20% from 3.15%.
The 10-year muni to Treasury ratio was calculated on Wednesday at 96.2% versus 97.6% on Tuesday, while the 30-year muni to Treasury ratio stood at 104.9% compared to 105.7%, according to MMD.
Primary Market
Bank of America Merrill Lynch won Atlanta's $252 million of Series 2015 GO public improvement bonds with a true interest cost of 3.37%. The bonds were priced to yield from 1.00% with a 5% coupon in 2017 to 3.50% with a 4.75% coupon in 2034.
The bonds were rated Aa2 by Moody's Investors Service, AA by Standard & Poor's and AA-plus by Fitch Ratings.
First Southwest and Grant & Associates were co-financial advisors for Atlanta's offering. Hunton & Williams and the Haley Law Firm were co-bond counsel and Greenberg Traurig and Riddle & Schwartz were co-disclosure counsel.
The issue will finance municipal building improvements, recreation centers, traffic projects, storm water drainage, street lights, and sidewalks.
Atlanta last sold comparable bonds competitively back on March 5, 2007, when Wachovia Bank bought $8 million of Series 2007A various purpose GOs with a TIC of 3.98%.
Issuance of GO debt has not been frequent in the A. Since 1995, Atlanta has only sold about $875 million of bonds with the most issuance occurring in 1998 and 2005 when the city offered $102 million and $94 million, respectively. The city sold no debt in 2006 or from 2010 through 2013.
RBC Capital Markets priced Miami-Dade County, Fla.'s $537.68 million deal for institutions after holding a retail order period on Tuesday.
"It went well, we got to the market and did really well in the retail period and that carried over to the institutions," said Frank Hinton, Miami-Dade County's Director of the Division of Bond Administration. "Most of the maturities were about three to four times oversubscribed and we were happy with that."
The $499.12 million of Series 2015A aviation revenue and refunding bonds, subject to the alternative minimum tax, were priced to yield from 0.63% with a 3% coupon in 2016 to 4% with a 5% coupon in 2033; a 2036 term bond was priced as 4 1/4s to yield 4.39%; a 2038 term bond was priced as 5s to yield 4.18%; and a 2045 term bond was priced as 4 1/2s to yield 4.60%.
The $38.57 million of Series 2015B non-AMT aviation revenue refunding bonds were priced as 5s to yield 2.91% in 2025, 3.09% in 2026 and 3.25% in 2027.
The deal was rated A by S&P and Fitch and AA-minus by Kroll Bond Rating Agency.
"On the refunding portion, the savings ended up being $27.526 million," Hinton said. "We have a 5% threshold of NPV savings and we surpassed that. We brought everything we could to the market and we finished with roughly 5.655% in PV savings, so we did well."
RBC also priced the Cleveland Municipal School District, Ohio's $152.2 million of unlimited tax Series 2015 tax-exempt and Series 2015B taxable GO on Wednesday. The bonds were priced as 2s to yield 0.75% in 2016 and as 5s to yield 3.65% in 2033. The bonds were also priced at par to yield 4.375% in 2045 and as 5s to yield 4.05% in 2046. A 2049 term bond was priced as 4 1/4s to yield 4.40%. The 2015 maturity was offered as a sealed bid. The deal is backed by the Qualified School Construction Bond Program, Direct Payment, and rated Aa2 by Moody's and AA by S&P and Fitch.
Citi priced the Erie County Industrial Development Agency, N.Y.'s $237.53 million of Series 2015A school facility refunding revenue bonds for the Buffalo City School District. The bonds were priced to yield from 0.288% with a 4% coupon in 2016 to 3.22% with a 5% coupon in 2029. The deal is rated Aa2 by Moody's and AA by S&P.
Citi received the written award on the city of Los Angeles' $231.35 million of wastewater system revenue and refunding bonds. The $100.84 million of Series 2015C green bonds were priced as 5s to yield from 2.96% in 2028 to 3.38% in 2035; a 2045 term was priced as 5s to yield 3.58%. The $108.86 million of Series 2015D refunding bonds were priced to yield 0.30% with a 2% coupon in 2016 and priced as 5s to yield from 1.60% in 2020 to 2.20% in 2023 and from 2.54% in 2025 to 3.34% in 2034. Both series are rated AA-plus by S&P, Fitch and Kroll Bond Rating Agency. The $21.65 million of Series 2015A subordinated refunding bonds were priced as 5s to yield 2.10% in 2022 and 2.45% in 2024. The series is rated AA by S&P, Fitch and Kroll.
Bank of America Merrill Lynch priced Corona Norco Unified School District, Calif.'s $149.77 million Series A election of 2014 GOs and Series 2015 GO refunding bonds. The $98.04 million of Series A bonds were priced as 4s to yield 0.38% in 2016 to 1.45% in 2019; and to yield from 2.13% with a 3% coupon in 2022 to 4.04% with a 4% coupon in 2036. A 2040 split maturity was priced as 4s to yield 4.11% and as 5s to yield 3.65%; and a 2044 term bond was priced as 5s to yield 3.71%. The $51.73 million of Series 2015 refunding bonds were priced to yield from 0.25% with a 3% coupon in 2015 to and as 5s to 3.27% in 2031. The deal is rated Aa2 by Moody's and AA-minus by S&P.
In the short-term sector, the state of Idaho came to market with $500 million of tax anticipation notes. Piper Jaffray priced the Series 2015 TANs as 2s to yield 0.29% on June 30, 2016. The issue is rated MIG1 by Moody's, SP1-plus by S&P and F1-plus by Fitch.
