The municipal market was bustling with activity on Tuesday afternoon as bonds from Georgia, Denver and New Mexico were issued in the competitive arena amid strong demand.
“The technicals are pretty positive,” a Philadelphia trader said. The day’s largest deals were all “priced pretty aggressively from where the high-grade scale would have traded yesterday” at two to four basis points tighter, he said.
Investors seemed to have a voracious appetite for the first of the week’s largest deals, according to the trader.
“Most of the balances were cleaned up on those deals,” he said. Investors with July 1 redemptions were probably buying paper ahead of time to get bonds before the typical summer lull around the July 4 holiday.
He pointed to the Pennsylvania Turnpike offering as one that attracts a lot of demand since it is a regular issuer in the market, has location recognition as an essential service credit, and will offer some spread as an A1 credit. “The market is very healthy right now,” he added.
Georgia sold about $1.23 billion of general obligation bonds in four competitive sales.
Citigroup won the $428.96 million of Series 2018A Tranche 2 GOs with a true interest cost of 3.3143%. Citi also won the $411.655 million of Series 2018A Tranche 1 GOs with a TIC of 2.1986%.
JPMorgan Securities won the $210.445 million of Series 2018B Tranche 1 taxable GOs with a TIC of 3.0144%. JPMorgan also won the $178.65 million of Series 2018B Tranche 2 taxable GOs with a TIC of 3.7948%.
The deals are rated triple-A by Moody’s Investors Service, S&P and Fitch Ratings.
The financial advisors are Public Resources Advisory Group and Terminus Municipal Advisors; bond counsel is Gray Pannell.
Since 2008, the Peach State has issued about $15 billion of bonds with the most issuance occurring in 2009 when it sold $2.51 billion of securities. It sold the least amount of bonds in 2008, when it issued $522.5 million of debt.
Also on Tuesday, the city and county of Denver, Colo., sold $260.905 of GOs in two sales.
Morgan Stanley won the $193 million of Series 2018A elevate Denver GOs with a TIC of 2.8597%. Morgan Stanley also won the $67.905 million of Series 2018B justice system facilities refunding GOs with a TIC of 2.0156%.
The deals are rated triple-A by Moody’s, S&P and Fitch. Financial advisors are Hilltop Securities; bond counsel are Greenberg Traurig and Becker Stowe.
New Mexico sold $122.56 million of Series 2018A severance tax bonds. Morgan Stanley won the bonds with a TIC of 2.4077%.
The bonds are rated Aa2 by Moody’s and AA-minus by S&P. Financial advisors are Fiscal Strategies Group and Public Resources Advisory Group; bond counsel are Sherman & Howard and Rodey Dickason.
In the negotiated sector on Tuesday, underwriters circulated a new premarketing scale on the Golden State Tobacco Securitization Corp.’s $1.699 billion of Series 2018A-1 tobacco settlement asset-backed bonds consisting of serial bonds and turbo term bonds. Underwriters put out the first premarketing scale on Monday; the deal will be priced for institutions on Wednesday.
S&P Global Ratings assigns the bonds structured finance preliminary ratings as follows: BBB to the 2030 to 2035 serial maturities and a BBB-minus rating to the 2036 turbo term bonds. S&P did not rate the turbo term bonds due June 1, 2047.
The serial bonds were being premarketed as 5s to yield from 3.27% in 2030 to 3.49% in 2035.
The $250 million of turbo terms of 2036 were being premarketed at par to yield 3.625%. The $1 billion of turbo terms of 2047 were split and being premarketed as $500 million of 5s to yield approximately 5.033% and as $500 million of 5 1/4s to yield 4.70%. The turbo 2036 bonds have a projected average life of 3.75 years with an expected final turbo redemption of 2025 while the turbo 2047 bonds have a projected average life of 20.88 years with an expected final turbo redemption of 2042.
Also Tuesday, Bank of America Merrill Lynch priced Massachusetts’ $225 million of Series 2018A rail enhancement and accelerated bridge programs commonwealth transportation find revenue bonds for retail investors ahead of the institutional pricing on Wednesday. The deal is rated Aa1 by Moody’s and AAA by S&P and Kroll Bond Rating Agency.
JPMorgan priced the Port of Houston Authority of Harris County, Texas’ $175.17 million of Series 2018A unlimited tax refunding bonds subject to the alternative minimum tax. The deal is rated triple-A by Moody’s and S&P.
Barclays Capital priced the Pennsylvania Turnpike Commission’s $182.455 million of Series 2018A turnpike revenue bonds. The deal is rated A1 by Moody’s, A-plus by Fitch and AA-minus by Kroll.
Tuesday’s Bond sales
Click here for the Denver sales
Click here for the state sale
Click here for the $225M state deal
Click here for the Turnpike deal
Bond Buyer 30-day visible supply at $6.85B
The Bond Buyer's 30-day visible supply calendar decreased $1.87 billion to $6.85 billion on Wednesday. The total is comprised of $1.74 billion of competitive sales and $5.10 billion of negotiated deals.
Municipal bonds were stronger on Tuesday, according to a late read of the MBIS benchmark scale. Benchmark muni yields fell one to three basis points in the one- to 30-year maturities. High-grade munis were also stronger, with yields calculated on MBIS’ AAA scale falling one to four basis points across the curve.
Municipals strengthened on Municipal Market Data’s AAA benchmark scale, which showed yields declining two basis points in the 10-year muni general obligation and dropping three basis points in the 30-year muni maturity.
Treasury bonds were stronger as stock prices declined.
On Tuesday, the 10-year muni-to-Treasury ratio was calculated at 85.1% while the 30-year muni-to-Treasury ratio stood at 97.8%, according to MMD. The muni-to-Treasury ratio compares the yield of tax-exempt municipal bonds with the yield of taxable U.S. Treasury with comparable maturities. If the muni/Treasury ratio is above 100%, munis are yielding more than Treasury; if it is below 100%, munis are yielding less.
Previous session's activity
The Municipal Securities Rulemaking Board reported 40,209 trades on Monday on volume of $8.02 billion.
Texas, New York and California were the states with the most trades, with the Lone Star State taking 14.747% of the market, the Empire State taking 13.341% and the Golden State taking 13.037%.
Treasury sells $35B 4-week bills
The Treasury Department Tuesday auctioned $35 billion of four-week bills at a 1.815% high yield, a price of 99.858833. The coupon equivalent was 1.843%. The bid-to-cover ratio was 3.16.
Tenders at the high rate were allotted 12.62%. The median rate was 1.790%. The low rate was 1.765%.
Treasury auctions $26B year bills
The Treasury Department Tuesday auctioned $26 billion of one-year bills at a 2.275% high yield, a price of 97.699722. The coupon equivalent was 2.347%. The bid-to-cover ratio was 3.41.
Tenders at the high rate were allotted 10.52%. The median rate was 2.245%. The low rate was 2.220%.
Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Vanessa Kim at 212-803-8474 for more information.