The big California tobacco bond deal was offered to retail investors in the primary market on Tuesday while traders said prices of top-rated municipal bonds finished unchanged in the secondary for the second straight session.
Primary Market
Citigroup Global Markets priced the California's Golden State Tobacco Securitization Corp.'s $1.69 billion of Series 2015A enhanced tobacco settlement asset-backed bonds ahead of the institutional pricing on Wednesday.
The issue was priced for retail to yield from 0.72% with a 3% coupon in 2017 to 2.02% with a 5% coupon in 2022; as 5s to yield 2.55% in 2026; as 4s to yield 4.38% in 2031; as 3 1/2s to yield 3.60 and as 5s to yield 3.16% in a split 2032 maturity; as 4s to yield 3.67 and as 5s to yield 3.27% in a split 2035 maturity; and as 5s to yield 3.40 and as 4s to yield 3.80% in a split 2045 maturity.
No retail orders were being taken in the 2033, 2034 or 2040 maturities; the 2016 maturity was offered as a sealed bid.
The asset-backed securities are rated A1 by Moody's Investors Service and A by Standard & Poor's and Fitch Ratings.
In other action in Tuesday, JPMorgan Securities priced the Fort Worth Independent School District, Texas' $271.50 million of Series 2015 unlimited tax refunding and school building bonds. The issue was priced to yield from 0.60% with a 5% coupon in 2017 to 2.88% with a 5% coupon in 2035; a 2040 term bond was priced as 4s to yield 3.36%. The 2016 maturity was offered as a sealed bid. The deal is backed by the Permanent School Fund Guarantee program, and rated triple-A by Moody's and S&P.
Morgan Stanley priced the San Francisco Community College District's $241.54 million of general obligation revenue bonds for the city and county of San Francisco. The bonds are priced to yield from 0.11% with a 5% coupon in 2015 to a 2031 split maturity that yields 3.33% with a 3.25% coupon and 2.93% with a 5% coupon. The deal is rated Aa3 by Moody's and A by S&P.
Morgan Stanley also priced the Dormitory Authority of the State of New York's $104.57 million of revenue bonds for St John's University. The DASNY bonds are priced to yield from 1.09% with a 3% coupon in 2018 to 3.23% with a 5% coupon in 2034; a 2037 term bond was priced as 5s to yield 3.25%. The bonds are rated Aa3 by Moody's and A-minus by S&P.
In the competitive arena, the University of Kentucky sold three separate competitive issues totaling about $280 million. Morgan Stanley won UK's $148.93 million of Series 2015 A general receipts bonds with a true interest cost of 3.6044%. Morgan Stanley also won the $110.76 million of Series 2015 B general receipts refunding bonds with a TIC of 2.2997%. No other information was available on the deals.
Citigroup won UK's $19.70 million of general receipts refunding bonds with a TIC of 1.9576%. The bonds are priced to yield from 0.30% with a 2% coupon in 2015 to 2.40% with a 4% coupon in 2026. All three issues are rated Aa2 by Moody's and AA by S&P.
Since 1995, the UK has sold roughly $11.5 billion of bonds. The highest years of issuance occurred in 2009 and 2014, when the university sold $1.34 billion and $3.27 billion, respectively. The lowest issuance years came in 1995 and 1996, when it sold just $12 million and $2 million, respectively. The university last sold bonds on June 26, 2014, when Morgan Stanley won $99.68 million of bonds with a TIC of 2.0213%.
Wells Fargo Securities won the South Broward Hospital District, Fla.'s $154.905 million of Series 2015 hospital revenue and refunding revenue bonds for the South Broward Hospital District Obligation Group with a TIC of 3.4300%. The bonds are priced to yield from 0.43% with a 5% coupon in 2016 to 3.759% with a 3.625% coupon in 2037. A 2040 term bond was priced as 4s to yield 3.85% and a 2045 term was priced as 4s to yield 3.90%.
Citi won the Port of Seattle's $156.99 million of limited tax general obligation and refunding bonds with a TIC of 3.0619%. The bonds were priced to yield from 0.24% with a 5% coupon in 2016 to 3.26% with a 4% coupon in 2040. The deal is rated Aa1 by Moody's and triple-A by both S&P and Fitch.
The Port last sold bonds on March 12, 2013 when Goldman, Sachs won $28 million of Series 2013A non-AMT limited tax GO refunding bonds with a TIC of 2.1475%.
Secondary Market
Top-quality munis closed steady for the second day in a row. The yield on the 10-year benchmark muni general obligation on Tuesday was unchanged from 1.94% on Monday, while the yield on 30-year GO remained at 2.76%, according to the final read of Municipal Market Data's triple-A scale.
Treasury prices were higher on Tuesday. The yield on the two-year Treasury note dropped to 0.56% from 0.58% from Monday, while the 10-year yield declined to 1.87% from 1.91% and the 30-year yield decreased to 2.46% from 2.50%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 103.4% versus 101.3% on Monday, while the 30-year muni to Treasury ratio stood at 112.1% compared to 110.0%.
