Prices of top-rated municipal bonds ended weaker on Tuesday, according to traders, as a spate of new deals came to market, led by two competitive sales totaling over $538 million from Nevada's Clark County School District.
JPMorgan Securities won the school district's $338.45 million of Series 2015C limited tax general obligation building and refunding bonds with a true interest cost of 3.06%. The issue was priced to yield from 0.62% with a 4% coupon in 2017 to 3.68% with a 4% coupon in 2035.
JPMorgan also won the $200 million of Series 2015D limited tax GO school bonds additionally secured by pledged revenues with a TIC of 3.22%. The bonds were priced to yield from 0.28% with a 5% coupon in 2016 to 3.68% with a 4% coupon in 2035.
The issue was rated A1 by Moody's Investors Service and AA-minus by Standard & Poor's.
The district, which enrolls over 320,000 students, has almost $2.9 billion of outstanding debt. Since 2005, the district has sold nearly $6 billion of bonds. The most issuance occurred in 2005 and 2007, when the district sold $980 million and $1.12 billion, respectively. The least amount of issuance took place in 2011 and 2013, when the school district sold $99 million and $129 million, respectively.
On the competitive short-term slate, the Louisville and Jefferson County, Ky., Metropolitan Sewer District sold $226.34 million of Series 2015 sewer and drainage system subordinated bond anticipation notes. Bank of America Merrill Lynch won the issue with a TIC of 0.39%. The BANs, due Nov. 22, 2016, were priced as 5s to yield 0.38%. The notes were rated MIG-1 by Moody's and SP-1-plus by S&P.
Wells Fargo Securities priced San Antonio, Texas' $235 million of new Series 2015 electric and gas system revenue bonds. The issue was priced to yield from 2.33% with a 5% coupon in 2026 to 3.66% with a 4% coupon in 2039. The bonds were rated Aa1 by Moody's, AA by S&P and AA-plus by Fitch Ratings.
Citigroup priced San Antonio's $100 million of Series 2015C variable-rate junior lien electric and gas systems revenue bonds. The bonds are due Dec. 1, 2045 and have a mandatory put date of Dec. 1, 2019. The issue was priced as 3s to yield 1.36%. The bonds were rated Aa2 by Moody's, AA-minus by S&P and AA-plus by Fitch. The issue has a "step rate," so if there is a failure by the remarketing agent to remarket the bonds on the put date, it will not result in default but rather the bonds will then bear an interest rate of 8% a year.
Bank of America Merrill Lynch priced the Los Angeles Municipal Improvement Corp.'s $297.71 million of Series 2015A taxable convention center lease revenue refunding bonds. The bonds were priced at par to yield from 1.26%, or 115 basis points above the comparable Treasury security, in 2017 to 3.592%, or 163 basis points above the comparable Treasury, in 2022. The issue was rated A-plus by S&P and Fitch and AA-minus by Kroll Bond Rating Agency.
Loop Capital Markets priced for retail investors the New York Triborough Bridge and Tunnel Authority's $156.32 million of general revenue bonds for the MTA bridges and tunnels, Series 2015B and Subseries 2008B-3.
The $65 million of Series 2015B bonds were priced to yield from 0.57% with a 5% coupon in 2017 to 3.18% with a 5% coupon in 2035. A 2040 maturity was priced as 5s to yield 3.36% and a 2045 maturity was priced as 5s to yield 3.43%; a 2016 maturity was offered as a sealed bid.
The $91.32 million of Subseries 2008B-3 bonds were priced as a remarketing as 5s to yield 2.62% in 2027 and 2.73% in 2028 and from 3.08% in 2033 to 3.32% in 2038.
The issue was rated Aa3 by Moody's, AA-minus by S&P and Fitch and AA by Kroll.
JPMorgan priced for retail investors Anchorage, Alaska's $310.44 million of GO and GO refunding bonds.
The $45.38 million of Series A general purpose GOs were priced to yield from 0.56% with a 3% coupon in 2017 to 3.06% with a 5% coupon in 2035. The $115.95 million of Series B general purpose GO refunding bonds was not offered to retail investors. The issue was rated triple-A by S&P and AA-plus by Fitch.
Secondary Market
The yield on the 10-year benchmark muni general obligation was three basis points higher at 2.09% from 2.06% on Monday, while the yield on the 30-year GO was two basis points stronger at 3.10% from 3.08%, according to the final read of Municipal Market Data's triple-A scale.
Treasury prices were lower on Tuesday, with the yield on the two-year Treasury rising to 0.77% from 0.75% on Monday, while the 10-year yield gained to 2.22% from 2.18% and the 30-year yield increased to 3.00% from 2.95%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 94.2% versus 94.4% on Monday, while the 30-year muni to Treasury ratio stood at 103.4% compared to 104.3%, according to MMD.
