The primary market stole the show again Tuesday as the week’s largest tax-exempt deals were priced.
The top offerings were each over $1.5 billion and saw a mixed reception as some yields were lowered while others were raised in repricings.
The biggest deal of the week was priced for institutions Tuesday. The Michigan Finance Authority issued $2.68 billion of unemployment obligatory assessment revenue bonds in two series. The bonds in both are rated triple-A by the major rating agencies.
Citi priced the first series of $1.47 billion for institutions, following a retail order period Monday.
Yields ranged from 0.20% with a 2% coupon in 2013 to 1.63% with 3%, 4% and 5% coupons, and 1.68% with a 5% coupon in a split 2019 maturity.
Portions of credits maturing in 2013 were offered via sealed bid. Yields were increased as much as five basis points on certain maturities from the retail order period Monday.
Bank of America Merrill Lynch priced the second series of $1.21 billion for institutions, following a retail order period Monday.
The bonds yielded 1.87% and 1.92% with a 5% coupon in a split 2020 maturity to 1.62% and 1.20% with a 5% coupon in a split 2023 maturity. Yields were lowered between five and 15 basis points from retail pricing Monday.
Credits maturing in 2020 are callable at par in 2019, bonds maturing in 2021 are callable at par in 2018 and 2019, credits maturing in 2022 are callable at par in 2016 and 2018, and bonds maturing in 2023 are callable at par in 2014 and 2016.
Goldman, Sachs & Co. priced for retail $1.8 billion of Dormitory Authority of the State of New York general-purpose personal income tax revenue refunding bonds. The bonds are rated AAA by Standard & Poor’s and AA by Fitch Ratings.
Yields ranged from 1.02% with 1.5% and 5% coupons in a split 2017 maturity to 3.60% with a 4% coupon in 2033. Credits maturing in 2025, 2026, and between 2028 and 2030 were not offered for retail. The bonds are callable at par in 2022.
JPMorgan priced and repriced $1.5 billion of Florida’s Citizens Property Insurance Corp. bonds and notes.
The first series of $1.1 billion is rated A2 by Moody’s Investors Service and A-plus by Standard & Poor’s and Fitch. Yields ranged from 1.72% with 3% and 5% coupons in a split 2015 maturity to 3.77% with 4% and 5% coupons in a split 2022 maturity. Yields were lowered as much as three basis points from preliminary pricing.
The second series of $200 million short-term notes is rated MIG-1 by Moody’s, SP-1-plus by S&P and F1-plus by Fitch. The bonds yielded 0.58% with a 2.5% coupon in 2013. Yields were lowered two basis points from preliminary pricing.
The third series of $200 million of SIFMA floating-rate notes are rated A2 by Moody’s and A-plus by Standard & Poor’s and Fitch. The bonds mature in 2015 and were priced 125 basis points above the SIFMA index.
Wells Fargo Securities priced for institutions $523.7 million of Connecticut general obligation bonds, following a retail order period Monday. The credit is rated Aa3 by Moody’s and AA by S&P, Fitch, and Kroll Bond Ratings.
Yields ranged from 0.28% with a 3% coupon in 2013 to 2.74% with 2.5% and 5% coupons in a split 2025 maturity. The bonds are callable at par in 2022. Yields were raised between three and seven basis points from retail pricing Monday.
In the competitive market, the Los Angeles Unified School District auctioned $600 million of short-term notes, rated M1G-1 by Moody’s and SP-1-plus by Standard & Poor’s.
JPMorgan won the bid for $335 million. The notes yielded 0.17% with a 2.5% coupon. Goldman Sachs won two bids for $50 million each. The notes yielded 0.16% and 0.13% with a 1% coupon. Bank of America Merrill won the bid for $50 million.
The notes yielded 0.16% with a 1.5% coupon. RBC Capital Markets won a bid for $50 million of notes that yielded 0.17% with a 1% coupon. Barclays Capital won the bid for $40 million, yielding 0.16% with a 1% coupon. Citi won $25 million, yielding 0.17% with a 2% coupon.
A New York trader noted that munis were weaker ahead of the deals being priced. “Munis are weaker, but secondary activity is busier,” the trader said, adding that while most activity was in the primary, some of the action spilled over into secondary trading.
Indeed, muni yields ended higher Tuesday, according to the Municipal Market Data scale. Yields inside four years were unchanged while yields outside five years rose one and two basis points.
On Tuesday, the 10-year yield rose one basis point to 1.91% while the 30-year yield jumped two basis points to 3.20%. The two-year was steady at 0.32% for the eighth straight session.
Treasuries ended the day weaker. The benchmark 10-year yield jumped seven basis points to 1.67% while the 30-year yield spiked up five basis points to 2.77%. The two-year yield rose three basis points to 0.31%.
In the secondary market, trades compiled by data provider Markit showed weakening.
Yields on Pennsylvania Higher Educational Facilities Authority 5s of 2031 jumped four basis points to 3.69% while Delaware Valley, Pa., Regional Finance Authority 5.5s of 2037 jumped five basis points to 4.49%.
Yields on New York Liberty Development Corp. 5.25s of 2035 and North Carolina 5s of 2021 each jumped three basis points to 4.44% and 1.79%, respectively.
Yields on San Diego Regional Transportation Commission 5s of 2023 increased one basis point to 2.36%.