Top-rated municipal bonds were steady to slightly stronger in secondary activity at mid-session, according to traders.
In the primary market, the big Houston bond deal was priced while the New York MTA sold notes in the competitive arena.
In the negotiated sector on Tuesday, Loop Capital Markets priced the city of Houston’s $581.99 million of Series 2016A public improvement refunding bonds.
The issue was priced to yield from 1.18% with a 5% coupon in 2019 to 3.46% with a 4% coupon in 2036; a 2038 term bond was priced as 3 1/2s to yield 3.65%. The bonds are rated Aa3 by Moody’s Investors Service and AA by Standard & Poor’s.
Since 2006, Houston has sold about $13.5 billion of debt. The biggest sale came in 2014 when the Space City sold $2.5 billion of bonds and the lowest issuance occurred in 2006 when the city issued $319 million of debt.
In the short-term competitive arena on Tuesday, the New York Metropolitan Transportation Authority sold $700 million of bond anticipation notes in two separate deals.
The N.Y. MTA offered $500 million of Series 2016 Subseries 2016A-1 due Oct. 1. Winners included Goldman Sachs, which took $340 million with a bid of 2.00% and a premium of $2,631,600, an effective rate of 0.450370%; BAML won $50 million with a bid of 5.00% and a premium of $1,141,740, an effective rate of 0.448040%; JPMorgan Securities won $50 million with a bid of 2.00% and a premium of $387,500, an effective rate of 0.455030%; Jefferies won $25 million with a bid of 2.00% and a premium of $194,250, an effective rate of 0.451080%; RBC Capital Markets won $25 million with a bid of 1.50% and a premium of $131,500, an effective rate of 0.451430%; and Citigroup won $10 million with a bid of 3.00% and a premium of $127,900, an effective rate of 0.450370%.
The MTA also sold $200 million of Series 2016 Subseries 2016A-2 due Feb. 1, 2017; winners included BAML, JPMorgan, Wells Fargo Securities, PNC Capital Markets and Citi. Detailed information was not immediately available.
Both series of BANs are rated MIG1 by Moody’s, SP1-plus by S&P and F1 by Fitch.
Also on Tuesday, JPMorgan priced the city of Mesa, Ariz.’s $137.26 million of Series 2016 utility systems revenue refunding bonds. The issue was priced to yield from 2.06% with a 5% coupon in 2025 to 3.11% with a 4% coupon in 2032. The bonds are rated Aa2 by Moody’s and AA-minus by S&P.
Citi is expected to price the city and county of Denver, Colo.’s $353 million of tax revenue refunding bonds consisting of tax-exempt and taxables on Tuesday. The deal is rated Aa3 by Moody’s and AA-minus by S&P.
RBC is set to price the Board of Regents of the Texas A&M University System’s $325.75 million of Series 2016B taxable revenue financing bonds on Tuesday. The bonds are rated triple-A by Moody’s and expected to be rated AA-plus by S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar fell $160.7 million to $9.05 billion on Tuesday. The total is comprised of $2.33 billion of competitive sales and $6.72 billion of negotiated deals.
Secondary Trading
At midday, the yield on the 10-year benchmark muni general obligation was steady from 1.84% on Monday, while the 30-year muni yield was as much as one basis point weaker from 2.80%, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were stronger on Tuesday after terror bombings in the EU capital of Brussels fostered a flight to quality move. The yield on the two-year Treasury fell to 0.85% from 0.87% on Monday, while the 10-year Treasury yield dropped to 1.89% from 1.92% and the 30-year Treasury bond yield decreased to 2.69% from 2.72%.
The 10-year muni to Treasury ratio was calculated on Monday at 95.8% compared to 97.7% on Friday, while the 30-year muni to Treasury ratio stood at 102.6% versus 104.3%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 34,934 trades on Monday on volume of $7.22 billion.
