Munis end stronger as market sees LAUSD's $1B GO sale hit the screens

Municipal bonds ended stronger on Tuesday as the the biggest deal of the week arrived in the primary market.

Morgan Stanley priced and repriced the Los Angeles Unified School District’s $1.08 billion of Series 2017A dedicated unlimited ad valorem property tax general obligation refunding bonds for institutions on Tuesday.

The issue was repriced as 5s to yield 0.74% in 2017, 0.83% in 2018 and 0.96% in 2019 and to yield from 1.25% with a 4% coupon in 2021 to 2.28% with 4% and 5% coupons in a split 2027 maturity.

The deal is rated Aa2 by Moody’s Investors Service and AAA by Fitch Ratings.

Since 2007, LAUSD has sold roughly $13.99 billion of securities, with the most issuance occurring in 2009 when it sold $2.92 billion. With this deal, the district has sold more than $1 billion in a year six times over the past decade, including three years when volume was greater than $2 billion. It didn't come to market in 2013.

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Wells Fargo Securities priced the Dormitory Authority of the State of New York’s $680.95 million of tax-exempt and taxable revenue bonds for New York University.

DASNY’s $452.97 million of Series 2017A tax-exempts were repriced to yield from 0.97% with a 4% coupon in 2019 to 3.15% with a 5% coupon in 2040; a 2043 maturity was priced as 5s to yield 3.17%.

DASNY’s $227.98 million of Series 2017B taxables were priced at par to yield from 1.599% in 2019 to 3.729% in 2032, 3.779% in 2034, 3.998% in 2039 and 4.148% in 2047.

The deal is rated Aa2 by Moody’s and AA-minus by S&P Global Ratings.

“The new issue market is not very robust,” one New York trader said on Tuesday. “The NYU deal looked a bit rich to me and it still got bumped a bit, so there’s no real pullback in demand out there.”

Barclays Capital priced and repriced the California Health Facilities Financing Authority’s $275.67 million of Series 2017A revenue bonds for the Children's Hospital of Los Angeles.

The issue was repriced to yield from 3.40% with a 5% coupon in 2030 to 3.77% with a 5% coupon in 2037. A split 2042 maturity was priced at par to yield 4.20% and as 5s to yield 3.88%; a 2047 maturity was priced as 5s to yield 3.90%; and a 2049 maturity was priced as 4s to yield 4.20%.

The deal is rated Baa2 by Moody’s and BBB-plus by S&P.

Citi priced the Oregon Department of Transportation’s $336.24 million of highway user tax revenue bonds.

The $244.5 million of Series 2017A senior lien bonds were priced as 5s to yield from 1.03% in 2019 to 2.26% in 2027; a 2018 maturity was offered as a sealed bid.

The $91.75 million of Series 2017B senior lien refunding bonds were priced as 5s to yield 1.03% in 2019 and 1.19% in 2020 and to yield from 2% in 2025 to 2.49% in 2029.

The deal is rated Aa1 by Moody’s, AAA by S&P and AA-plus by Fitch.

Barclays priced the Connecticut Health and Educational Facilities Authority’s $170.92 million of Series 2017A revenue bonds for Yale University.

The $85.46 million of Series 2017A-1 bonds were priced as 5s to yield 1.50% in 2042 with a mandatory put in 2022.

The $85.46 million of Series 2017A-2 bonds were priced as 5s to yield 1.50% in 2042 with a mandatory put in 2022.

The deal is rated triple-A by Moody’s and S&P.

Citigroup priced the South Dakota Housing Development Authority’s $165.61 million of homeownership mortgage bonds.

The $110.5 million of Series 2017B bond not subjec5t to the alternative minimum tax were priced at par to yield from 1.75% in 2022 to 2.85% and 2.95% in a split 2028 maturity, and to yield 3.40% in 2032, 3.70% in 2036 and 3.90% in 2040. A 2047 maturity was priced as 4s to yield 2.11%.

The $30.24 million of Series 2017C AMT bonds were priced at par to yield from 1.15% in 2017 to 2% and 2.10% in a split 2022 maturity. A 2039 maturity was priced as 4s to yield 2.23%.

The $24.87 million of Series 2017A taxable bonds were priced at par to yield from 1.50% in 2017 to 3.442% and 3.492% in a split 2028 maturity. A 2032 maturity was priced at par to yield 3.892% and a 2037 planned amortization class bond was priced at par to yield 3.06% with an average life of four years.

The deal is rated triple-A by Moody’s and S&P.

In the competitive arena, the Phoenix Civic Improvement Corp. sold $232.27 of bonds in two separate sales.

Morgan Stanley won the $216.58 million of Series 2017A subordinate excise tax revenue bonds with a true interest cost of 2.04%. The issue was priced to yield from 0.90% with a 5% coupon in 2018 to about 3.10% with a 3% coupon in 2032.

Citi won the $15.69 million of Series 2017C taxable subordinate excise tax revenue bonds with a TIC of 1.94%.

The deals are rated Aa2 by Moody’s and AA-plus by S&P and Fitch.

Market sources said that Sibert Cisneros Shank on Tuesday released a premarketing scale on the District of Columbia’s $576 million of Series 2017A GOs that are set to price on Wednesday.

The consensus scale was offered to yield from 1.01% with a 3% coupon in 2019 to 3.11% with a 5% coupon and 3.41% with a 4% coupon in a split 2037 maturity.

The deal is rated Aa1 by Moody’s and AA by S&P and Fitch.

Secondary market
Top-shelf municipal bonds finished stronger on Tuesday. The yield on the 10-year benchmark muni general obligation fell two basis points to 2.09% from 2.11% from Monday, while the 30-year GO yield decreased two basis points to 2.96% from 2.98%, 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 was unchanged from 1.29% on Monday, while the 10-year Treasury yield dropped to 2.33% from 2.34%, and the yield on the 30-year Treasury bond decreased to 2.99% from 3.00%.

The 10-year muni to Treasury ratio was calculated at 89.9% on Tuesday, compared with 90.2% on Monday, while the 30-year muni to Treasury ratio stood at 99.0%, versus 99.1%, according to MMD.

MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 37,982 trades on Monday on volume of $8.04 billion.

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Primary bond market Secondary bond market New York State Dormitory Authority State of Oregon Connecticut Health & Educational Facilities Authority
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