Municipal bonds finished as much as a basis point stronger on Wednesday, as more new issues came to market, led by competitive sales from South Carolina's Clemson University.
Secondary Market
The yield on the 10-year benchmark muni general obligation was down one basis point to 1.97% from 1.98% on Tuesday, while the 30-year yield was off one basis point to 2.89% from 2.90%, according to the final read of Municipal Market Data's triple-A scale.
Treasuries were higher, as the yield on the two-year Treasury fell to 0.92% from 0.94% on Tuesday while the 10-year Treasury yield was lower at 2.20% from 2.24% and the 30-year decreased to 2.96% from 2.97%.
The 10-year muni to Treasury ratio was calculated on Wednesday at 89.3% compared to 88.5% on Tuesday, while the 30-year muni to Treasury ratio stood at 97.6% compared to 97.5%, according to MMD.
Primary Market
In the competitive sector, Clemson University sold two separate issues totaling $210.8 million. Both sales were rated Aa2 by Moody's Investors Service and AA by Fitch Ratings.
Citigroup won the $191 million of Series 2015B higher education revenue bonds with a true interest cost of 3.37%. The issue was priced to yield from 1.05% with a 5% coupon in 2019 to 3.40% with a 4% coupon in 2041; a 2046 maturity was priced as 4s to yield 3.48%.
Citi also won the $19.8 million of Series 2015B athletic facilities revenue bonds with a TIC of 3.33%. Pricing information wasn't available. The sale comes with Clemson's football team, the Tigers, poised to compete in the national semi-final on Dec. 31. Clemson is the only undefeated team in major college football.
Since 2005, Clemson University has issued about $483 million of debt. The most issuance took place in 2014, 2005, and 2012 when the university sold $50 million, $37 million and $33 million of bonds, respectively. The university did not come to the market from 2006 to 2011 or in 2013. The university, located in South Carolina, has averaged less than one deal per year.
Clemson last sold comparable bonds competitively on May 5, when Citi won $90.29 million of Series 2015 higher education revenue bonds with a TIC of 3.66% and Citi won $64.39 million of Series 2015 athletic facilities revenue bonds with a TIC of 3.73%.
Wells Fargo priced the Municipal Electric Authority of Georgia's $168.93 million bond deal. The $1.72 million of Series HH power revenue bonds were offered as a sealed bid for a 2018 maturity. The $148.82 million of Series 2015A Project One subordinated bonds were priced to yield from 0.57% with a 5% coupon in 2017 to 3.14% with a 5% coupon in 2035. The $10.03 million of Series 2015A Project One subordinated capital appreciation bonds were priced to yield from 3.50% in 2030 to 3.60% in 2032. The $8.36 million of Series 2015A general resolution projects subordinated bonds were priced to yield from 1.15% with a 4% coupon in 2019 to 3.55% with a 3.50% coupon.
The power revenue bonds are rated A1 by Moody's and A-plus by S&P and Fitch, while the Project One and general resolution subordinates are rated A2 by Moody's, A by S&P and A-plus by Fitch.
Siebert Brandford Shank & Co. priced the city of Shreveport, La.'s $120 million of Series 2015 water and sewer system revenue and refunding bonds. The bonds were priced to yield from 0.62% with a 5% coupon in 2016 to 2.57% with a 5% coupon in 2024. The bonds were also priced to yield from 2.74% with a 5% coupon in 2026 to 3.31% with a 5% coupon in 2035. A 2040 term bond was priced to yield 3.55% with a 5% coupon.
Assured Guaranty Municipal insured the 2026-2035 maturities, totaling $60.57 million. The insured maturities were rated A2 by Moody's and AA by S&P, while the uninsured maturities were rated A3 by Moody's and BBB-plus by S&P.
Municipal CUSIP Requests Rose 3.2% in November from October
Requests for new municipal CUSIP identifiers rose 3.2% to 1,147 in November, CUSIP Global Services announced on Wednesday. The rise from October was the second month in a row CUSIP volume increased. On a year-over-year basis, new municipal bond identifier requests were up 19.2% through November.
The report tracks the issuance of new CUSIPS as an early indicator of debt market activity. The latest data suggests continued growth in new municipal bond issuance over the next several weeks, CUSIP Global said.
"The volume increases we are seeing in municipal bond identifier requests are driven almost entirely by new issues coming to market, as opposed to refundings," Gerard Faulkner, Director of Operations for CUSIP Global, said in a press release. "It looks like municipal issuers are looking to take advantage of current interest rates while they still can."
Regionally, municipal bond issuers in Texas accounted for the highest volume of new CUSIP identifiers in November, asking for a total of 155 identifiers.
"With much of the marketplace anticipating an interest rate increase being announced after the Dec. 16 FOMC meeting, debt issuers are clearly making one more push to fund at current rates," Richard Peterson, Senior Director of Global Markets Intelligence, S&P Capital IQ, said in the release. "It will be critical to watch CUSIP request volume in the immediate aftermath of a rate increase to determine how the capital markets will digest the news."
