Issuers in California, Texas and Louisiana headlined primary market activity on Tuesday as top-quality municipal bonds ended stronger.
The state of California sold three separate competitive offerings totaling about $1.5 billion.
JPMorgan Securities won the $645.3 million of the Bid Group B tax-exempt various purpose unlimited tax general obligation bonds with a true interest cost of 1.53%. The $176 million of GO construction bonds were priced to yield from 1.09% with a 5% coupon in 2021 to 1.68% with a 4% coupon in 2025 while the $469.3 million of GO refunding bonds were priced to yield from 0.61% with a 5% coupon in 2017 to 1.79% with a 5% coupon in 2026.
Bank of America Merrill Lynch won the $606.7 million of the Bid Group C tax-exempt various purpose GO bonds with a TIC of 2.83%. The $56 million of GO construction bonds were priced as 5s to yield 1.99% in 2028 and at par to yield 3% in 2035 while the $550.5 million of GO refunding bonds were priced to yield from 1.91% with a 5% coupon in 2027 to 3.04% with a 3% coupon in 2036.
Wells Fargo Securities won the $236.8 million of the Bid Group A taxable various purpose GOs with a TIC of 1.33%. The issue was priced as 1.50s to yield 0.60% in 2017, as 0.90s to yield 0.80% in 2018 and at par to yield 1.50% in 2021.
All three sales are rated Aa3 by Moody's Investors Service, AA-minus by Standard & Poor's and A-plus by Fitch Ratings.
Also in the competitive arena, Fort Lauderdale, Fla., sold $165.94 million of Series 2016 water and sewer revenue and revenue refunding bonds.
Raymond James won the deal with a TIC of 2.71%. The issue was priced to yield from 0.33% with a 5% coupon in 2016 to 3.08% with a 3% coupon in 2038. The deal is rated Aa1 by Moody's and AA-plus by S&P.
In the negotiated sector, BAML priced the Texas Transportation Commission's $615 million of Series 2016 state highway improvement GOs.
The issue was priced as 5s to yield from 0.562% in 2017 to 2.58% in 2041, 2.60% in 2043, and 2.63% in 2046.
The deal is rated triple-A by Moody's, S&P and Fitch.
Proceeds will go toward capital projects, particularly those designed to relieve congestion in major urban areas. Since 2006, the commission has sold about $28 billion of bonds with the most issuance occurring in 2014 when it sold $5.5 billion. The TTC did not come to market in 2011 or 2013.
JPMorgan priced the state of Louisiana's $283.94 million of Series 2016B GO refunding bonds for retail investors ahead of the institutional pricing on Wednesday.
The issue was priced for retail to yield from 1.56% with 3% and 5% coupons in a split 2022 maturity to 2.43% with a 5% coupon in 2029. The deal is rated AA by S&P and AA-minus by Fitch.
JPMorgan also priced the San Diego Unified School District, Calif.'s $126.92 million of Series R-5 GO dedicated unlimited ad valorem property tax refunding bonds. The issue was priced as 5s to yield 1.56% in 2025, as 5s to yield 1.69% in 2026 and as 5s to yield 1.99% and as 4s to yield 2.19% in a split 2029 maturity.
The bonds are rated Aa2 by Moody's, triple-A by Fitch and AA-plus by Kroll Bond Rating Agency.
RBC Capital Markets priced the New Jersey Educational Facilities Authority's $118.59 million of Series 2016B revenue refunding bonds for Montclair State University. The issue was priced to yield from 0.96% with a 3% coupon in 2019 to 3.14% with a 3% coupon in 2038. The deal is rated A1 by Moody's and AA-minus by S&P.
Secondary Market
The yield on the 10-year benchmark muni general obligation fell one basis point to 1.59% from 1.60% on Monday, while the 30-year muni yield dropped one basis point to 2.53% from 2.54%, according to the final read of the Municipal Market Data's triple-A scale.
U.S. Treasuries were narrowly mixed. The yield on the two-year Treasury increased to 0.75% from 0.74% on Monday, while the 10-year Treasury yield rose to 1.78% from 1.77% and the yield on the 30-year Treasury bond was flat at 2.59%.
The 10-year muni to Treasury ratio was calculated at 89.2% on Tuesday compared with 90.4% on Monday, while the 30-year muni to Treasury ratio stood at 97.5% versus 98.3%, according to MMD.
