The municipal market was slightly firmer yesterday as the primary market took center stage.
In the new-issue market, Raymond James & Associates priced $589 million of water and sewer system revenue bonds for Miami-Dade County.
The bonds mature from 2011 through 2030, with term bonds in 2034 and 2039. Yields range from 0.85% with a 2% coupon in 2011 to 5.03% with a 5% coupon in 2039. The bonds are callable at par in 2020.
Bonds maturing from 2017 through 2027, and in 2029, 2030, and 2039 were insured by Assured Guaranty Municipal. The remaining bonds are uninsured. The underlying credit is rated A1 by Moody’s Investors Service, A-plus by Standard & Poor’s, and A by Fitch Ratings.
The New York City Transitional Finance Authority yesterday issued $356.5 million of bonds with two competitive offerings.
The $273.1 million of Series F-1 taxable Build America Bonds sold competitively to JPMorgan with a true interest cost of 5.52%, or 3.60% after the 35% federal subsidy. This was the TFA’s first competitive BAB deal.
The bonds, which mature from 2018 to 2030, with term bonds in 2035 and 2040, were not formally re-offered.
The $83.4 million of Series F-3 taxable subordinate-lien bonds sold competitively to Bank of America Merrill Lynch with a TIC of 3.26%.
The bonds mature from 2012 through 2018, with coupons ranging from 1.13% in 2012 to 4.39% in 2018. Bonds maturing in 2012 and 2014 were priced at par with yields of 1.13% and 2.67%, respectively. The remaining bonds were sold and not available.
The bonds were priced to yield between 25 and 75 basis points over the comparable Treasury yield.
The two competitive deals were part of larger financing, totaling $751 million, which also included $395 million of taxable bonds that were sold as a limited offering to the New York State Division of the Lottery at the same levels as the competitive bid results.
The $395 million consisted of $348 million of Series F-2 BABs, and $47 million of Series F-4 traditional taxable bonds.
According to a press release, the TFA will also price $150 million of tax-exempt new-money variable rate demand bonds on or about the transaction’s March 3 closing date.
New York City Comptroller John Liu said that yesterday’s deals “went very well.”
“It shows that New York City is still a very worthy credit risk and a good investment for people out there,” he said. “Every so often at the very least we should issue bonds competitively so we can be sure we’re getting the best price on an ongoing basis.”
These bonds are rated Aa2 by Moody’s, AAA by Standard & Poor’s, and AA-plus by Fitch.
Traders said tax-exempt yields in the secondary market were lower yesterday.
“We’re seeing some gains,” a trader in New York said. “There’s some decent activity out there. People are getting deals done. We’re probably better a good two basis points or so, maybe a little more, maybe a little less, depending on where on the curve you’re trading and what kind of credit you’ve got.”
“There might not be a whole lot of movement on the short end, maybe pretty flat inside of five years or so, but longer than that, we’re probably a good basis point or two firmer,” a trader in Los Angeles said. “Maybe even three better in spots, but overall I’d say one or two basis points lower in yield.”
The Treasury market showed gains yesterday as equities sold off. The benchmark 10-year note was quoted near the end of the session with a yield of 3.69% after opening at 3.80%.
The yield on the two-year note was quoted near the end of the session at 0.85% after opening at 0.89%.
The yield on the 30-year bond was quoted near the end of the session at 4.63% after opening at 4.73%.
The Municipal Market Data triple-A scale yielded 2.87% in 10 years and 3.82% in 20 years yesterday, following levels of 2.89% and 3.83% on Monday. The scale yielded 4.18% in 30 years yesterday, down from 4.19% on Monday.
Monday’s triple-A muni scale in 10 years was at 76.1% of comparable Treasuries and 30-year munis were at 88.6%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 92.3% of the comparable London Interbank Offered Rate.
Elsewhere in the new-issue market yesterday, Ramirez & Co. priced for retail investors $252.5 million of mental health services facilities improvement revenue bonds for the Dormitory Authority of the State of New York.
The bonds mature from 2011 through 2025, with yields ranging from 0.85% with a 2% coupon in 2011 to 4.32% with a 4.25% coupon in 2025. The bonds are callable at par in 2020.
The credit is rated AA-minus by Standard & Poor’s and A-plus by Fitch.
Mecklenburg County, N.C., competitively sold $114.9 million of refunding GOs to Bank of America Merrill Lynch, with a TIC of 3.09%.
The bonds mature from 2011 through 2026, with yields ranging from 0.25% with a 2% coupon in 2011 to 3.27% with a 4% coupon in 2024.
Bonds maturing from 2019 through 2021 and in 2025 and 2026 were not formally re-offered.
The bonds, which are not callable, are rated triple-A by all three major ratings agencies.
In economic data released yesterday, the consumer confidence index slumped to 46.0 in February from an upwardly revised 56.5 in January, the Conference Board reported yesterday. The January index was originally reported as 55.9. Economists polled by Thomson Reuters predicted the index would be 55.0.