Prices of top-rated municipal bonds closed mixed on Wednesday, according to traders, with yields remaining unchanged to rising by as much as two basis points as the market absorbed the biggest deal of the week.
Goldman, Sachs priced the Salt River Project's $917.95 million of Agricultural Improvement Power District, Ariz. Series 2015A revenue bonds for institutions after a one-day retail order period.
The bonds were priced to yield 0.12% with a 1% coupon in 2015 and as 5s to yield 0.55% in 2016, 0.85% in 2017, 1.60% in 2020, 1.84% in 2021, 2.06% in 2022, 2.65% in 2026, 2.76% in 2027, and 2.87% in 2028; and to yield from 3.58% with a 4% coupon and 3.22% with a 5% coupon in a split 2032 maturity to 3.385% with a 3% coupon and 3.38% with a 5% coupon in a 2036 split maturity. A 2041 term bond was priced as 5s to yield 3.52% and a 2045 term was priced as 5s to yield 3.56%.
The deal is expected to produce about $300 million of new money for SRP's capital projects, with the rest of the bonds refunding outstanding debt for savings.
Since 1997, the Salt River Project has issued roughly $7.31 billion of bonds. The years with the most issuance were 2002 and 2009, when $1.31 billion and $1.04 billion were sold, respectively. SRP didn't come to market in 1998-2000, 2004 or 2007, or 2013-2014.
The SRP doesn't have any other bond issues planned after this one, according to corporate treasurer Steve Hulet.
"The SRP's six-year financial plan includes capital expenditures to meet future electric system growth and replacement of aging infrastructure," Hulet said. "We would anticipate funding a portion of that capital plan with bond issues. However, SRP has no specific plans for a bond sale following the currently proposed sale."
JPMorgan priced the Las Vegas Valley Water District, Nev.'s $388.12 million of Series 2015 A, B and C limited tax GO refunding bonds. The issue is rated Aa1 by Moody's and AA-plus by S&P. The series A bonds for $170.645 million were priced to yield from 0.80% with a 4% coupon in 2017 to 2.94% with a 5% coupon in 2026. The 2016 maturity was offered as a sealed bid. The series B bonds for $176.040 million were priced to yield from 0.99% with a 4% coupon in 2017 to 2.97% with a 5% coupon in 2027. The 2016 maturity was offered as a sealed bid. The series C bonds for $41.435 million were priced to yield from 0.91% with a 4% coupon in 2017 to 3.34% with a 3.125% coupon in 2029. The 2016 maturity was offered as a sealed bid.
JPMorgan priced the Harris County Cultural Education Facilities Finance Corp.'s $193.89 million of hospital revenue bonds for the Texas Children's Hospital. The Series 2015-1 bonds were priced as 3s to yield 0.55% in 2016 and as 5s to yield from 0.95% in 2017 to 3.57% in 2033; a 2034 maturity was priced as 4s to yield 4.02%. The issue is rated Aa2 by Moody's and AA by S&P and Fitch.
Also, Stifel priced the Chippewa Valley Schools, Mich.'s $233.27 million of unlimited tax GO refunding bonds. The $37.56 million of Series 2015 Series A tax-exempts were priced as 5s to yield from 2.49% in 2023 to 3.16% in 2027. The $196.72 million of Series B taxable were priced to yield from 10 basis points over the comparable 2016 Treasury to 95 basis points over the comparable 2022 Treasury. The issue is rated Aa2 by Moody's and AA-minus by S&P.
Secondary Market
The yield on the 10-year benchmark muni general obligation was flat on Wednesday from 2.24% on Tuesday, while the yield on the 30-year GO was up by two basis points to 3.23% from 3.21%, according to the final read of Municipal Market Data's triple-A scale. Secondary trading was light, according to Interactive Data.
Treasury prices were mixed on Wednesday as the yield on the two-year Treasury note declined to 0.58% from 0.60% on Tuesday, while the 10-year yield was increased to 2.28% from 2.27% and the 30-year yield increased to 3.07% from 3.02%.
The 10-year muni to Treasury ratio was calculated on Wednesday at 98.2% versus 99.2% on Tuesday, while the 30-year muni to Treasury ratio stood at 105.2% compared to 106.5%, according to MMD.
