Top rated municipal bonds finished stronger on Tuesday, according to traders, with yields on some maturities falling by as much as four basis points.
The yield on the 10-year benchmark muni general obligation dropped four basis points to 1.58% from 1.62% on Monday while the 30-year muni yield fell four basis points to 2.54% from 2.58%, according to the final read of Municipal Market Data's triple-A scale.
U.S. Treasuries were stronger on Tuesday as stock prices fell on worries about global economic growth. The yield on the two-year Treasury dropped to 0.75% from 0.79% on Monday, while the 10-year Treasury yield declined to 1.80% from 1.86% and the yield on the 30-year Treasury bond decreased to 2.66% from 2.72%.
The 10-year muni to Treasury ratio was calculated at 87.9% on Tuesday compared with 86.9% on Monday, while the 30-year muni to Treasury ratio stood at 95.5% versus 95.0%, according to MMD.
Primary Market
RBC Capital Markets priced the Dormitory Authority of the State of New York's $219.29 million of Series 2016 A, B, C and D school district revenue bond financing program revenue bonds for institutions after holding a one-day retail order period.
The $193.44 million of Series A bonds were priced to yield from 0.75% with a 2% coupon in 2017 to 3.14% with a 3.125% coupon in 2036. A 2039 term bond was priced as 3 1/4s to yield 3.26%. The 2016 maturity was offered as a sealed bid. The 2034-2036 and 2039 maturities are insured by Build America Mutual.
The $14.77 million of Series B bonds were priced to yield from 0.54% with a 2% coupon in 2016 to 1.67% with a 5% coupon in 2024. The $7.47 million of Series C bonds were priced to yield from 0.54% with a 2% coupon in 2016 to 1.67% with a 5% coupon in 2024. The $3.61 million of Series D bonds were priced to yield from 0.54% with a 2% coupon in 2016 to 1.72% with a 5% coupon in 2024. The entire Series D bonds are insured by BAM.
The Series A bonds are rated A-plus by Standard & Poor's and AA-minus by Fitch Ratings except for the 2034-2036 and 2039 maturities which are rated AA by S&P. The Series B bonds are rated Aa3 by Moody's Investors Service and AA-minus by Fitch; the Series C bonds are rated AA-minus by S&P and Fitch; and the Series D bonds are rated AA by S&P and AA-minus by Fitch.
In the Pacific Northwest, Seattle, Wash., sold three separate issues totaling $146.47 million.
The largest sale, $103.66 million of Series 2016A limited tax general obligation improvement and refunding bonds, was won by Bank of America Merrill Lynch with a true interest cost of 2.18%. The bonds were priced to yield from 0.55% with a 5% coupon in 2017 to 2.69% with a 4% coupon in 2036.
BAML also won the $36.74 million of Series 2016 unlimited tax GO improvement bonds with a TIC of 3.08% while Janney won the $6.07 million of Series 2016B taxable limited tax GO improvement bonds with a TIC of 1.76%.
The Series 2016A and Series 2016B bonds are rated Aa1 by Moody's and triple-A by S&P and Fitch and the Series 2016 bonds are rated triple-A by Moody's, S&P and Fitch.
The Dallas Community College District, Texas, competitively sold $122.42 million of Series 2016 limited tax GO refunding bonds. JPMorgan Securities won the bonds with a TIC of 1.61%. The bonds were priced to yield from 0.53% with a 3% coupon in 2017 to 2.19% with a 3% coupon in 2028. The deal is rated triple-A by Moody's, S&P and Fitch.
The Missouri Board of Public Buildings competitively sold $100 million of Series 2016A special obligation bonds on Tuesday. BAML won the bonds with a TIC of 2.29%. The issue was priced to yield from 0.55% with a 3% coupon in 2017 to 3.04% with a 3% coupon in 2036. The deal is rated Aa1 by Moody's and AA-plus by S&P and Fitch.
Citigroup priced the Louisiana Public Facilities Authority's $155.66 million of Series 2016 revenue refunding bonds for the Ochsner Clinic Foundation Project.
The bonds were priced to yield from 1.68% with a 5% coupon in 2023 to 3.39% with a 4% coupon in 2036. A term bond in 2041 was priced to yield 3.57% with a 4% coupon and another term bond in 2047 was priced to yield 3.28% with a 5% coupon. The deal is rated Baa1 by Moody's and A-minus by Fitch.
BAML priced Whiting, Ind.'s $101.95 million of environmental facilities revenue bonds for the BP Products North America Inc. project. The bonds, which are subject to the alternative minimum tax, were priced as a bullet maturity in 2046 to yield 2.19% with a 5% coupon and a mandatory tender date of March 1, 2023. The deal is rated A2 by Moody's and A-minus by S&P.
On Wednesday, the biggest deal of the week is coming from the North Texas Tollway Authority. JPMorgan is expected to price the NTTA's $947 million of Series 2016A system first tier revenue refunding bonds. The deal is rated A1 by Moody's and A by S&P.
Since 2006, the NTTA has sold more nearly $14 billion of debt, with over $1 billion of bonds sold in 2008, 2009, 2011 and 2015. The smallest issuance year was 2013, when the authority did not sell any bonds.
