Top-shelf municipal bonds were unchanged on Monday, according to traders who got an early start to the week with one institutional sale and retail pricing for a second deal.
Ipreo estimates volume will hold steady at $8.8 billion, after a revised total of $8.9 billion sold in the past week, according to updated figures from Thomson Reuters. The calendar for the week ahead is composed of $7.17 billion of negotiated deals and $1.62 billion of competitive sales.
Bank of America Merrill Lynch priced the New Jersey Higher Education Student Assistance Authority’s $250 million of student loan revenue bonds. The $141.10 million of series 2017-1A senior bonds subject to alternative minimum tax were priced to yield from 2.46% with a 5% coupon in 2022 to 3.35% with a 5% coupon in 2027 and from 3.64% with a 5% coupon in 2029 to 3.96% with a 4% coupon in 2033. A term bond in 2040 was priced to yield 4.21% with a 4% coupon.
The $86.90 million of senior series 2017-1B bonds subject to AMT were priced to yield from 1.78% with a 5% coupon in 2019 to 2.27% with a 5% coupon in 2021. A super sinker in 2028 was priced at par to yield 2.875%. The weighted average lives for the super sinker are zero percent conditional prepayment rate for seven years, 4% CPR for four years, 6% CPR for 3.4 years, 8% CPR for three years, 10% CPR for 2.8 years, 12% CPR for 2.6 years and 14% CPR for 2.5 years. These two parts of the deal are rated Aaa by Moody’s Investors Service and AA by S&P Global Ratings.
The $22 million of subordinate bonds were priced as a bullet maturity in 2047 to yield 4.38% with a 4.25% coupon. This part of the deal is rated Aa1 by Moody’s and A by S&P.
Morgan Stanley is scheduled to price the week’s largest issue, Los Angeles Unified School District’s $1.08 billion of general obligation refunding and dedicated unlimited ad valorem property tax bonds, for institutions on Tuesday.
The deal was priced for retail investors Monday, to yield 0.97% with a 5% coupon in 2019 and from 1.25% with a 4% coupon in 2021 to 2.26% with a 4% coupon and 5% coupon in a split 2027 maturity. The 2017 and 2018 maturities were offered as sealed bids. The deal is rated Aa2 by Moody’s and AAA by Fitch Ratings.
Wells Fargo plans to price the Dormitory Authority of the State of New York’s $677 million of revenue tax exempt bonds and taxable bonds for New York University on Tuesday following indications of interest Monday.
Market sources said the $452 million of tax-exempts was pre-marketed to yield from 1.02% with a 4% coupon in 2019 to 3.48% with a 4% coupon in 2040. A term bond in 2043 was pre-marketed to yield 3.51% with a 4% coupon.
According to a market source, a price talk was circulated for the $225 million taxable bond portion, with the 2019 maturity about 30 basis points above the comparable Treasury and the 2034 maturity about 150 basis points above the comparable Treasury. A term bond in 2039 was about 110 basis points above the comparable Treasury and one in 2047 was about 125 basis points above the comparable Treasury. The deal is rated Aa2 by Moody’s and AA-minus by S&P.
The largest competitive sale will come from the Phoenix Civic Improvement Corp., when it auctions $215.87 million of subordinate excise tax revenue and refunding bonds Tuesday.
The yield on the 10-year benchmark muni general obligation was steady at 2.11% from Friday, while the 30-year GO yield was unchanged at 2.98%, according to a final read of Municipal Market Data's triple-A scale.
U.S. Treasuries were mostly weaker at Monday’s close. The yield on the two-year Treasury was steady at 1.29% from Friday, while the 10-year Treasury yield rose to 2.34% from 2.33%, and the yield on the 30-year Treasury bond increased to 3.00% from 2.99%.
The 10-year muni to Treasury ratio was calculated at 90.2% on Monday, compared with 90.6% on Friday, while the 30-year muni to Treasury ratio stood at 99.1%, versus 99.6%, according to MMD.
Previous week's top underwriters
The top negotiated and competitive underwriters of last week included Citi, Bank of America Merrill Lynch, JPMorgan Securities, Ramirez & Co., and Morgan Stanley, according to Thomson Reuters data.
In the week of May 7 to May 13, Citi underwrote $2.5 billion, BAML $1.7 billion, JPMorgan $970 million, Ramirez $680 million and Morgan Stanley $680 million.
Prior week's actively traded issues
Revenue bonds comprised 56.97% of new issuance in the week ended May 12, up from 56.78% in the previous week, according to Markit. General obligation bonds comprised 37.12% of total issuance, down from 37.13%, while taxable bonds made up 5.91%, down from 6.09%.
Some of the most actively traded issues by type were from California and Ohio.
In the GO bond sector, the San Francisco Bay Area Rapid Transit District, Calif., 5s of 2047 were traded 20 times. In the revenue bond sector, the Cuyahoga County, Ohio, 5.5s of 2057 were traded 61 times. And in the taxable bond sector, the University of California 3.063s of 2025 were traded 43 times.