Prices of top-rated municipal bonds finished weaker on Tuesday, according to traders, with yields on some maturities rising by as much as two basis points.
There was action aplenty in the primary as the New York City Transitional Finance Authority sold $750 million of bonds in the competitive arena. In the negotiated sector, the California Infrastructure and Economic Development Bank’s $414 million of green bonds came to market.
Secondary Market
The yield on the 10-year benchmark muni general obligation rose two basis points to 1.62% from 1.60% on Monday, while the 30-year muni yield increased two basis points to 2.57% from 2.55%, according to the final read of Municipal Market Data's triple-A scale.
U.S. Treasuries were also weaker on Tuesday. The yield on the two-year Treasury climbed to 0.73% from 0.70% on Monday, while the 10-year Treasury yield rose to 1.78% from 1.73% and the yield on the 30-year Treasury bond increased to 2.60% from 2.56%.
The 10-year muni to Treasury ratio was calculated at 91.0% on Tuesday compared with 92.9% on Monday, while the 30-year muni to Treasury ratio stood at 98.6% versus 99.6%, according to MMD.
Primary Market
The NYC TFA competitively sold $750 million of bonds in three separate offerings of tax-exempt and taxable debt.
Bank of America Merrill Lynch won $500 million of Fiscal 2016 Series F Subseries F-3 future tax secured tax-exempt subordinate bonds with a true interest cost of 3.18%. The TFA said it received nine bids for the bonds. The issue was priced to yield from 2.06% with a 5% coupon in 2029 to 3.35% with a 3.25% coupon in 2042.
Citigroup won $198.465 million of Fiscal 2016 Series F Subseries F-1 future tax secured taxable subordinate bonds with a TIC of 2.29%. The TFA said it received nine bids for the bonds. The issue was priced at par to yield from 0.90% in 2018, or 18 basis points above the comparable Treasury security, to 2.76% in 2026, or 100 basis points above the comparable Treasury security.
Citi won $51.535 million of Fiscal 2016 Series F Subseries F-2 future tax secured taxable subordinate bonds with a TIC of 2.94%. The TFA said it received 10 bids for the bonds. The issue was priced at par to yield 2.86% in 2027, or 110 basis points above the comparable Treasury security, and 2.96% in 2028, or 120 basis points above the comparable Treasury security.
“Today’s sale of $750 million of new money TFA bonds saw strong demand, with at least nine bidders on each series, and with the winning bidders reporting good going away business,” said New York City Comptroller Scott M. Stringer. “We’re proud of these results, which reflect both TFA’s high credit rating and strong support for NYC bonds.”
All three deals are rated Aa1 by Moody’s Investors Service and triple-A by Standard & Poor’s and Fitch Ratings.
In the negotiated sector, Morgan Stanley priced the California IEDB’s $414.21 million of clean water state revolving fund revenue green bonds for institutions in the afternoon after a morning retail order period.
The issue was priced for institutions to yield from 0.65% with 3% and 4% coupons in a split 2018 maturity to 2.28% with a 5% coupon in 2035; a 2017 maturity was offered as a sealed bid. The deal is rated triple-A by Moody’s, S&P and Fitch.
Since 2006, the IEDB has issued over $6.6 billion of debt, with the most issuance occurring in 2008 when $1.87 billion of bonds were sold. The least amount of debt was offered in 2014 when $109 million of bonds were sold.
Loop Capital Markets priced the state of Ohio’s $231 million of Series S general obligation highway capital improvement bonds, backed by its full faith and credit and highway user receipts.
The issue was priced to yield from 0.67% with 2% and 5% coupons in a split 2018 maturity to 2.13% with a 5% coupon in 2031; a 2017 maturity was offered as a sealed bid. The deal is rated Aa1 by Moody’s, triple-A by S&P and AA-plus by Fitch.
The Platte River Power Authority, Colo., competitively sold $154.6 million of Series JJ power revenue bonds.
JPMorgan Securities won the deal with a TIC of 2.19%. The issue was priced to yield from 0.70% with a 5% coupon in 2018 to 2.45% with a 5% coupon in 2036. The bonds are rated AA by S&P and Fitch.
Las Vegas, Nev., competitively sold $141.23 million of bonds in three offerings.
BAML won the $42.59 million of Series 2016B limited tax GO various purpose refunding bonds additionally secured by pledged revenues with a TIC of 2.75%. The issue was priced to yield from 0.73% with a 4% coupon in 2017 to 3% at par in 2034; a 2036 maturity was priced as 3s to yield approximately 3.10%.
Morgan Stanley won the $82.46 million of Series 2016A limited tax general obligation performing arts center refunding bonds additionally secured by pledged revenues with a TIC of 2.90%. Pricing information was not available. Citi won the $16.19 million of Series 2016C limited tax GO sewer refunding bonds additionally secured by pledged revenues with a TIC of 1.07%. Pricing information was not available.
All three deals are rated Aa2 by Moody’s and AA by S&P.
On Wednesday, Goldman Sachs is expected to price the Orange County Health Facilities Authority, Fla.’s $257 million of Series 2016A hospital revenue refunding bonds for the Orlando Health Obligated Group. The deal is rated A2 by Moody’s and A by S&P and Fitch.
Raymond James is set to price the Board of Regents of the University of Texas System’s $134.41 million of revenue financing system refunding bonds on Wednesday. The deal is rated triple-A by Moody’s, S&P and Fitch.
