Munis finish flat as some deals price

Top-shelf municipal bonds finished Monday unchanged on a businer-than-usual Monday, as a few deals priced for retail and for institutional investors.

Primary market
Bank of America Merrill Lynch priced New York City’s $800.45 million of general obligation bonds for retail investors in the first day of a two-day retail order period, preceding institutional pricing on Wednesday.

The bonds were priced for retail to yield from 0.90% with a 4% coupon in 2018 to 2.26% with a 5% coupon in 2028. The deal is rated Aa2 by Moody’s Investors Service and AA by S&P Global Ratings and Fitch Ratings.

A market source said that the pre-marketing scale for the $265.99 million of taxable portion of Port of Seattle’s $266 million of Series 2017B taxable intermediate lien revenue and refunding bonds was circulating on Monday.

The source said that the bonds were about 55 basis points above the comparable Treasury in 2019 and about 140 basis points above the comparable Treasury in 2032. A term bond in 2036 was about 95 basis points above the comparable Treasury. The 2017 and 2018 maturities were offered as sealed bids. The deal is rated A1 by Moody’s, A-plus by S&P and AA-minus by Fitch.

On Tuesday, Citi is set to price the other two pieces of the sale: $17.33 million of Series 2017A bonds and $324.8 million of Series 2017C alternative-minimum tax bonds.

Goldman Sachs received the verbal award for the Washington Economic Development Authority’s $133.6 million of environmental facilities revenue bonds for Columbia Pulp I, LLC Project, a deal that was expected to price on Wednesday.

The bonds were priced to yield 7.75% with a 7% coupon in a bullet 2032 maturity.

Morgan Stanley priced the Connecticut Housing Finance Authority’s $125 million of housing mortgage finance program bonds for both retail and institutional investors on Monday, accelerating thepricing for institutions, which had been planned for Tuesday.

The $121.315 million of 2017 subseries D-1 non-alternative minimum tax bonds were priced at par to yield from 1.05% and 1.125% in a split 2019 maturity to 2.70% and 2.70% in a split 2028 maturity. The bonds were also priced at par to yield 3.20% in a 2032 term bond, 3.40% in a 2035 term bond and 3.60% in a 2042 term bond. A term bond in 2047 was priced to yield 1.90% with a 4% coupon.

The $3.685 million of 2017 subseries D-2 AMT bonds were priced to yield 1.00% and 1.05% in a split 2018 bullet maturity. The deal is rated triple-A by Moody’s and S&P.

"The deal was accelerated due to both market conditions and demand," said one New York trader. "Spreads were tightened down in some maturities [compared with the retail pricing],"

JPMorgan priced Hays County, Texas’s $96.395 million of limited tax bonds for institutional investors. The bonds were priced to yield from 1.08% with a 5% coupon in 2020 to 3.19% with a 4% coupon in 2037. A term bond in 2042 was priced to yield 3.31% with a 4% coupon. The deal is rated AA by S&P and Fitch.

Secondary market
Top shelf municipal bonds were mostly unchanged to finish Monday, with only the 2020 through 2023 maturities seeing yields lower by a basis point. The yield on the 10-year benchmark muni general obligation was flat at 1.90% from Friday, while the 30-year GO yield was steady at 2.69%, according to a final read of Municipal Market Data's triple-A scale.

Treasuries were weaker at Monday’s market close. The yield on the two-year Treasury gained to 1.36% from 1.34% on Friday, the 10-year Treasury yield rose to 2.25% from 2.23% and the yield on the 30-year Treasury bond increased to 2.83% from 2.80%.

The 10-year muni to Treasury ratio was calculated at 84.4% on Monday, compared with 85.1% on Friday, while the 30-year muni to Treasury ratio stood at 95.0% versus 96.0%, according to MMD.

Previous week's top underwriters
The top negotiated and competitive municipal bond underwriters of last week included Bank of America Merrill Lynch, Morgan Stanley, Citigroup, Loop Capital Markets and Goldman Sachs, according to Thomson Reuters data.

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In the week of July 16 to July 22, BAML underwrote $1.36 billion, Morgan Stanley $766 million, Citi $648 million, Loop $647 million, and Goldman $618 million.

Prior week's actively traded issues
Revenue bonds comprised 54.85% of new issuance in the week ended July 21, up from 53.96% in the previous week, according to Markit. General obligation bonds comprised 38.65% of total issuance, down from 39.65%, while taxable bonds made up 6.50%, up from 6.39%.

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Some of the most actively traded bonds by type were from Illinois and New York issuers.

In the GO bond sector, the Chicago Board of Education 7s of 2046 were traded 73 times. In the revenue bond sector, the New York City TFA 4s of 2036 were traded 106 times. And in the taxable bond sector, the Illinois 5.1s of 2033 were traded 56 times.

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Primary bond market Secondary bond market City of New York, NY
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