Top-rated municipal bonds were steady to slightly stronger Tuesday, according to traders, as Houston priced the week's biggest bond deal and the New York MTA sold notes in the competitive arena.
Loop Capital Markets priced the city of Houston's $559.64 million of Series 2016A public improvement refunding bonds in the negotiated sector.
The issue was priced to yield from 1.14% with a 5% coupon in 2019 to 3.36% with a 4% coupon in 2036; a 2038 term bond was priced as 3 1/2s to yield 3.55%. The bonds are rated Aa3 by Moody's Investors Service and AA by Standard & Poor's.
Since 2006, Houston has sold about $13.5 billion of debt. The biggest sale came in 2014 when the Space City sold $2.5 billion of bonds and the lowest issuance occurred in 2006 when the city sold $319 million of debt.
In the short-term competitive arena on Tuesday, the New York Metropolitan Transportation Authority sold $700 million of transportation revenue bond anticipation notes in two separate deals.
"MTA was pleased with the broad interest in the transaction and active participation by the bidders as demonstrated by the large number of bids submitted," an authority spokesman told The Bond Buyer.
MTA offered $500 million of Series 2016A Subseries 2016A-1 due Oct. 1. The authority said 14 firms submitted 113 bids; the weighted average true interest cost was 0.45521%. There were six winning firms.
Goldman Sachs won $340 million with a bid of 2.00% and a premium of $2,631,600, an effective rate of 0.450370%; BAML won $50 million with a bid of 5.00% and a premium of $1,141,740, an effective rate of 0.448040%; JPMorgan Securities won $50 million with a bid of 2.00% and a premium of $387,500, an effective rate of 0.455030%; Jefferies won $25 million with a bid of 2.00% and a premium of $194,250, an effective rate of 0.451080%; RBC Capital Markets won $25 million with a bid of 1.50% and a premium of $131,500, an effective rate of 0.451430%; and Citigroup won $10 million with a bid of 3.00% and a premium of $127,900, an effective rate of 0.450370%.
The MTA also sold $200 million of Series 2016A Subseries 2016A-2, due Feb. 1, 2017, attracting 121 bids from 14 firms. The weighted average TIC was 0.59317%. There were five winning firms. Wells Fargo Securities won $200 million with a bid of 2.00% and a premium of $1,171,000, an effective rate of 0.591940%; Wells Fargo also won $20 million with a bid of 2.00% and a premium of $232,600, an effective rate of 0.601430%; JPMorgan won $50 million with a bid of 2.00% and a premium of $586,000, an effective rate of 0.590760%; PNC Capital Markets won $10 million with a bid of 2.00% and a premium of $116,800, an effective rate of 0.595500%; BAML won $10 million with a bid of 5.00% and a premium of $366,816, an effective rate of 0.590560%; and Citi won $10 million with a bid of 3.00% and a premium of $199,501, an effective rate of 0.601330%.
Firms are able to submit multiple bids, which is why Wells Fargo Bank was awarded two separate blocks of the Subseries 2016A-2 notes.
"Each of the bid awards above carried different pricing characteristics and therefore a different TIC -- from MTA's perspective, the Weighted Average TIC is the key number and what we will report to the board," the MTA spokesman said.
Proceeds of the sale will be used to finance existing transit and commuter projects that have already been approved by the MTA board. Both series of notes are rated MIG1 by Moody's, SP1-plus by S&P and F1 by Fitch.
The MTA really began taking advantage of lower interest rates in December, starting with a transportation revenue bond refunding on an advance basis. It has been doing likewise with other credits.
"We've taken some of those savings off the table of every credit over the past quarter, I guess I'd say," Finance Director Pat McCoy said told the finance committee at Monday's meeting. "We're going to will continue to be opportunistic and get into the market to take advantage of refundings whenever we can."
JPMorgan priced the city of Mesa, Ariz.'s $137.26 million of Series 2016 utility systems revenue refunding bonds. The issue was priced to yield from 2.03% with a 5% coupon in 2025 to 3.03% with a 4% coupon in 2032.
The bonds are rated Aa2 by Moody's and AA-minus by S&P.
JPMorgan also priced the Broward County School Board, Fla.'s $214.98 million of certificates of participation.
The $196.15 million of Series 2016A COPs were priced to yield from 1.10% with a 5% coupon in 2019 to 3.40% with a 3.25% coupon in 2033. The $18.83 million of Series 2016B COPs were priced as 5s to yield 2.31% in 2025, 2.47% in 2026 and 2.61% in 2027. The deal is rated Aa3 by Moody's and A-plus by S&P and Fitch.
The Board of Regents of the Texas A&M University System came to market with two taxable deals totaling $417.1 million.
RBC priced the $325.58 million of Series 2016B taxable revenue financing bonds on Tuesday. The issue was priced at par to yield from 0.85% in 2017 to 3.556% in 2031; a 2037 maturity was priced at par to yield 3.993%. Raymond James priced the $91.52 million of taxable Series 2016A revenue financing system bonds. The issue was priced at par to yield from 0.51% in 2016 to 3.556% in 2031; a 2037 maturity was priced at par to yield 3.993%. The bonds are rated triple-A by Moody's and S&P and AA-plus by Fitch.
Secondary Trading
The yield on the 10-year benchmark muni general obligation was steady from 1.84% on Monday, while the 30-year muni yield fell two basis points to 2.78% from 2.80%, according to the final read of Municipal Market Data's triple-A scale.
U.S. Treasuries were narrowly mixed on Tuesday. The yield on the two-year Treasury rose to 0.89% from 0.87% on Monday, while the 10-year Treasury yield gained to 1.93% from 1.92% and the 30-year Treasury bond yield was flat at 2.72%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 95.2% compared with 95.8% on Monday, while the 30-year muni to Treasury ratio stood at 102.3% versus 102.6%, according to MMD.
