Top-rated municipal bonds strengthened at mid-session, according to traders, as long-term yields slipped into record low territory.
In the primary, the market saw several large issues price, topped by the LaGuardia Airport deal.
Primary Market
Citigroup priced the New York Transportation Development Corp.'s $2.31 billion of tax-exempts, subject to the alternative minimum tax, for the LaGuardia Special Facilities Terminal B Redevelopment Project. Pricing information was not immediately available.
Traders said the deal was garnering widespread interest and excitement with one source saying that over $20 billion of orders had come in for the deal.
On Monday, underwriters sent around a pre-marketing scale on the offering. According to the pre-marketing scale, the bonds were yielding from 2.91% with a 5% coupon in 2030 to 3.60% with a 4% coupon in 2037; a split 2041 maturity was priced as 4s and 5s to yield 3.77% and 3.47%; a 2046 maturity was priced as 5s to yield 3.52%; and a split 2051 maturity was priced as 4s and 5 1/4s to yield 3.97% and 3.57%. The deal is also expected to contain a taxable component totaling about $150 million of bonds.
The bonds are rated Baa3 by Moody's Investors Service and triple-B by Fitch Ratings.
Bank of America Merrill Lynch held a second day for retail orders Tuesday on New York City's $800.13 million of Fiscal 2016 Series E and F GOs ahead of the institutional pricing on Wednesday.
The $774.04 million of Series E bonds were priced on Tuesday for retail to yield from 0.86% with a 5% coupon in 2019 to 2.90% with a 3% coupon in 2036; the 2017 and 2018 maturities were offered as sealed bids. No retail orders were taken in the 2027-2032 maturities.
The $26.10 million of Series F bonds were priced for retail on Tuesday to yield from 0.86% with a 3% coupon in 2019 to 2.79% with a 3% coupon in 2034; the 2016-2018 maturities were offered as sealed bids.
NYC GOs are rated Aa2 by Moody's and AA by S&P Global Ratings and Fitch.
BAML also priced the Municipal Electric Authority of Georgia's $350 million bond offering.
The $270.67 million of Series 2016A project one subordinated bonds were priced to yield from 0.79% with a 4% coupon in 2018 to 2.31% with a 5% coupon in 2030. The 2017 maturity was offered as a sealed bid. The bonds are rated A2 by Moody's, A by S&P and A-plus by Fitch.
The $41.14 million of Series 2016A general power revenue bonds were priced to yield from 0.63% with a 5% coupon in 2017 to 2.60% with a 5% coupon in 2036. A term bond in 2042 was priced to yield 2.78% with a 5% coupon. The bonds are rated A1 by Moody's and A-plus by both S&P and Fitch.
The $37.41 million of Series 2016A general resolution projects subordinated bonds were priced to yield from 0.79% with a 3% coupon in 2018 to 2.31% with a 5% coupon in 2030. The 2017 maturity was offered as a sealed bid. The bonds are rated A2 by Moody's, A by S&P and A-plus by Fitch.
The $9.6 million of Series HH power revenue bonds were priced to yield from 0.75% with a 5% coupon in 2018 to 2.26% with a 5% coupon in 2030. The bonds are rated A1 by Moody's and A-plus by both S&P and Fitch.
Since 2007, MEAG has issued about $6 billion of debt, with the largest issuance year occurring in 2010 when the authority sold $2.79 billion of securities. MEAG did not come to market at all in 2013 or 2014.
Raymond James priced Henrico County, Va.'s $125.33 million of Series 2016 water and sewer revenue and refunding bonds. The issue was priced to yield from 0.65% with a 2% coupon in 2018 to 2.36% with a 5% coupon in 2038; a 2042 maturity was priced as 5s to yield 2.46% and a split 2046 maturity was priced as 5s to yield 2.50% and at par to yield 3.125%. A 2017 maturity was offered as a sealed bid. The deal is rated Aa1 by Moody's and triple-A by S&P and Fitch.
Piper Jaffray priced the Metropolitan Government of Nashville and Davidson County, Tenn.'s $346.93 million of Series 2016 GO refunding bonds. The issue was priced to yield from 0.76% with a 2% coupon in 2018 to 2.25% with a 5% coupon and 2.48% with a 4% coupon in a split 2033 maturity. The deal is rated Aa2 by Moody's and AA by S&P.
Goldman Sachs is expected to price the Municipal Improvement Corp. of Los Angeles' $800.22 million of lease revenue refunding bonds for retail investors on Tuesday ahead of the institutional pricing on Wednesday. The deal is rated A-plus by S&P and Fitch and AA-minus by Kroll Bond Rating Agency.
In the competitive arena on Tuesday, the state of New Mexico sold $303.78 million of severance tax bonds in two separate sales.
BAML won the $261 million of Series 2016A severance tax bonds and Series 2016B refunding severance tax bonds with a true interest cost of 1.38%. The $79.02 million of Series 2016A bonds were priced as 5s to yield from 1.14% in 2021 to 1.80% in 2026. The $181.98 million of Series 2016B bonds were priced as 4s to yield from 0.89% in 2019 to 1.51% in 2024. The bonds are rated Aa2 by Moody's and AA-minus by S&P.
Robert W. Baird won the $42.78 million of Series 2016C taxable severance tax bonds with a TIC of 1.27%. Pricing information was not immediately available.
The Washington Suburban Sanitary District, Md., competitively sold $183.63 million of bonds in two separate sales.
Wells Fargo Securities won the $145 million of consolidated public improvement bonds of 2016 with a TIC of 2.81%. The issue was priced to yield from 0.57% with a 5% coupon in 2017 to approximately 3.109% with a 3% coupon in 2046.
BAML won the $38.63 million of consolidated public improvement refunding bonds of 2016 with a TIC of 1.08%. The issue was priced to yield from 0.61% with a 4% coupon in 2017 to 1.39% with a 4% coupon in 2025. Both deals are rated triple-A by Moody's, S&P and Fitch.
Loudoun County, Va., competitively sold $144.67 million of Series 2016A GO public improvement and refunding bonds. JPMorgan won the deal with a TIC of 1.86%. Pricing information was not immediately available. The deal is rated triple-A by Moody's, S&P and Fitch.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $294.0 million to $17.49 billion on Tuesday. The total is comprised of $6.46 billion of competitive sales and $11.03 billion of negotiated deals.
Secondary Market
The yield on the 30-year general obligation scale was from one to three basis points weaker from its record low level of 2.42% set last week, according to a midday read of Municipal Market Data's triple-A scale.
The yield on the 10-year benchmark muni was unchanged from 1.54% on Friday, according to MMD. Its all-time low of 1.47% was set in November 2012.
U.S. Treasuries were narrowly mixed on Tuesday. The yield on the two-year Treasury rose to 0.79% from 0.78% on Monday, while the 10-year Treasury yield slipped to 1.74% from 1.75% and the yield on the 30-year Treasury bond decreased to 2.57% from 2.59%.
The 10-year muni to Treasury ratio was calculated at 87.9% on Monday compared to 90.4% on Friday, while the 30-year muni to Treasury ratio stood at 93.2% versus 94.8%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 36,632 trades on Monday on volume of $10.53 billion.
