The New York Yankees stepped up to the plate and took a swing into in the muni market on Tuesday as Goldman Sachs issued a pre-marketing wire for the New York Industrial Development Agency’s revenue refunding bonds.
Municipals were little changed as yields remained mostly steady on the AAA GO scales.
Muni yields have been volatile this year, starting off 2020 at 1.44% for the 10-year and 2.07% for the 30-year on Jan. 2, according to Refinitiv Municipal Market Data.
In the first quarter yields were on a downward tend until the effects of the COVID-19 pandemic were felt. On March 2, the 10-year muni was at 0.93% and the 30-year at 1.52%, but by April 1 the 190-year had hit 1.68% with the 30-year at 2.49%.
In May, yields slipped back a bit, with the 10-year at 1.35% and the 30-year at 2.16% and by June the 10-year was at 0.84% and the 30-year at 1.65%. For the rest of the year, 10-year yields have hovered around 0.90% and 0.80% and 1.63% and 1.56% for the 30-year.
Primary market
The NYC IDA (A2/AA/NR/AA+) is coming to market on Wednesday with a $935 million deal consisting of $819.005 million of Series 2020A tax-exempt and $116.13 million of Series 2020B taxable payment in lieu of taxes (PILOT) revenue refunding bonds for the New York Yankees.
On Tuesday, Goldman Sachs sent around a premarking wire with a tentative pricing for the tax-exempts to yield from 1.50% with a 5% coupon in 2028 to 2.07% with a 4% coupon in 2032, to yield from 2.62% with a 3% coupon in 2036 to 2.78% with a 3% coupon in 2040, to yield 2.83% with 4% coupon in 2045. A split 2045 maturity was priced as 4s to yield 2.83% (uninsured) and 2.63% and a split 2049 maturity was priced as 3s to yield 3.17% (uninsured) and 2.97%.
Assured Guaranty Municipal Corp. insured the issue except for the parts of the split 2045 and 2049 maturities, which are rated Baa1 by Moody’s Investors Service and BBB+ by Fitch Ratings.
Proceeds from the tax-exempts will refund part of the outstanding Series 2006 and 2009 PILOTs and go to replenish the debt service reserve fund.
Proceeds from the taxables will defease part of the Series 2009A PILOT and Series 2009A bonds pay the principal on the 2021 maturing PILOT bonds and pay the scheduled swap payments on it; pre-fund principal payments of the of part of the Series 2006 PILOTs; and replenish the debt service reserve fund and part of the Series 2006 strike reserve funds.
Raymond James & Associates priced the NYC Municipal Water Finance Authority’s (Aa1/AA+/AA+/NR) $563.525 million of Fiscal 2021 Series AA tax-exempt fixed-rate water and sewer system second general resolution revenue bonds for retail investors ahead of Wednesday’s institutional offering.
The Fiscal 2021 Subseries AA-1 bonds were priced for retail in a triple-split 2050 maturity as 3s to yield 2.40%, as 4s to yield 2.15% and as 5s to yield 1.95%.
The Fiscal 2021 Subseries AA-2 bonds were priced for retail to yield from 0.76% with a 5% coupon in 2028 to 1.26% with a 5% coupon in 2032, 1.88% with a 4% coupon in 2040, 1.97% with a 4% coupon in 2042 and 2% with a 4% coupon in 2043.
Morgan Stanley priced and repriced the Texas Water Development Board’s (NR/AAA/AAA/NR) $628.19 million of Master Trust state water implementation revenue fund for Texas revenue bonds.
The issue was repriced to yield from 0.11% with a 3% coupon in 2021 to 1.85% with a 3% coupon in 2040 and to yield 1.84% with a 4% coupon in 2045, 1.95% with a 4% coupon in 2051 and at par to yield 2.375% in 2055.
The issue had been tentatively priced to yield from 0.14% with a 3% coupon in 2021 to 1.89% with a 3% coupon in 2040 and to yield 1.84% with a 4% coupon in 2045, 1.89% with a 4% coupon in 2051 and at par to yield 2.375% in 2055.
BofA priced the Chicago Park District, Ill.’s (NR/AA-AA-/AA) $108.41 million of harbor facilities revenues alternate revenue source Series 2020F GOs and Series 2020F-2 refunding GOs. The Series 2020F-1 GOs were priced to yield from 2.50% with a 5% coupon in 2033 to 2.82% with a 5% coupon in 2040. The Series 2020F-2 refunding GOs were priced to yield from 1.21% with a 5% coupon in 2023 to 2.82% with a 5% coupon in 2040.
The Louisville and Jefferson County Metropolitan Sewer District Sewer and Drainage System, Ky., (Aa3/AA//NR/NR) sold $111.185 million of taxable Series 2020C sewer and drainage system revenue refunding bonds. Wells Fargo won the bonds and priced them to yield from 0.29% at par in 2021 to 2.48% with a 2.375% coupon in 2038; a 2044 maturity was priced to yield 2.75% with a 2.65% coupon.
The district also sold $226.34 million of subordinated bond anticipation notes (MIG-1/SP1+/NR/NR). BofA won the BANs due Oct. 20, 2021, and priced them as 5s to yield 0.22%.
BofA priced Michigan’s (Aa1/NR/NR/NR) $153.365 million of tax-exempt and taxable environmental program GOs. The Series 2020A tax-exempts were priced to yield from 0.95% with a 5% coupon in 2030 to 1.72% with a 4% coupon in 2040. The Series 2020B taxables were priced at par to yield from 1.54% in 2030 to 2.07% in 2035 and 2.50% in 2040.
Citigroup priced the Pennsylvania Turnpike Commission’s (A1/NR/A+/AA-) $242.345 million of Series 2020B turnpike revenue bonds. The deal was priced as 5s to yield from 0.24% in 2023 to 2% in 2040, 2.12% in 2045 and 2.19% in 2050.
JPMorgan priced Charlotte, N.C.’s (Aaa/AAA/NR/NR) $104.705 million of storm water fee revenue bonds. The bonds were priced to yield from 0.13% with a 5% coupon in 2021 to 2.10% with a 2% coupon in 2042. A 2045 maturity was priced as 2.125s to yield 2.24% and a 2050 maturity was priced as 2.25s to yield 2.33%
Miami-Dade County, Fla., sold $540 million of special obligation bonds in three offerings.
JPMorgan Securities won the $338.395 million of Series 2020B taxable capital asset acquisition bonds with a true interest cost of 0.5195%. The taxables were priced to yield 0.50% with a 0.375% coupon in 2023.
Wells Fargo Securities won the $124.84 million of Series 2020C exempt non-AMT capital asset acquisition bonds with a TIC of 2.477%. The bonds were priced to yield from 1% with a 5% coupon in 2029 to 1.90% with a 4% coupon in 2038.
Robert Baird won the $76.755 million of taxable capital asset acquisition refunding bonds with a TIC of 1.5159%.
PFM Financial Advisors was the financial advisor. Hogan Lovells and Steve E. Bullock were the bond counsel.
Shelby County, Tenn., (Aa1/AA+/AA+/NR) sold $202.665 million of Series 2020B public improvement and school general obligation bonds.
BofA Securities won the bonds with a TIC of 1.9187%. The bonds were priced to yield from 0.13% with a 5% coupon in 2021 to 1.65% with a 4% coupon in 2040.
On Wednesday, JPMorgan Securities is set to price the Portland International Airport, Ore.’s (NR/A+/NR/NR) $348.72 million of Series 27A AMT and Series 27B taxable revenue bonds.
On Thursday, Jefferies is expected to price Chicago’s (NR/A/A/A+) $1.2 billion of general airport senior lien bonds for O’Hare International Airport.
Secondary market
Some notable trades Tuesday:
Texas waters 5s of 2022 traded at 0.18%. Utah GOs, 5s of 2025 at 0.24%-0.23%. Texas trans 5s of 2025 at 0.32%-0.33%.
NYC TFAs 5s of 2027 traded at 0.77%-0.79%. NYC TFAs 5s of 2030 traded at 1.26%-1.25%. NYC TFA subs, 3s of 2048 traded at 2.51% after originally pricing at 2.57%.
Georgia GOs 5s of 2028 traded at 0.61%. King County Washington SD #201 4s of 2031 traded at 1.03%-1.02%. On Thursday they traded at 1.06%. Harris County, Texas food 4s of 2036 traded at 1.44%. Washington GOs, 5s of 2039 at 1.48%.
High-grade municipals were little changed Tuesday, according to final readings on Refinitiv MMD’s AAA benchmark scale. Yields were flat in 2021 and 2022 at 0.12% and 0.13%, respectively. The yield on the 10-year muni slipped one basis point to 0.83% while the 30-year yield remained at 1.58%.
The 10-year muni-to-Treasury ratio was calculated at 124.3% while the 30-year muni-to-Treasury ratio stood at 111.2%, according to MMD.
The ICE AAA municipal yield curve showed the 2021 and 2022 maturities flat, both at 0.12%, the 10-year maturity steady at 0.79% and the 30-year flat at 1.59%.
The 10-year muni-to-Treasury ratio was calculated at 124% while the 30-year muni-to-Treasury ratio stood at 110%, according to ICE.
The IHS Markit municipal analytics AAA curve showed the 2021 maturity yielding 0.14%, the 2022 maturity at 0.15%, the 10-year muni at 0.85% and the 30-year at 1.59%.
The BVAL AAA curve showed the yield on the 2021 maturity unchanged at 0.11%, the 2022 maturity unchanged at 0.13%, the 10-year steady at 0.80% and the 30-year unchanged at 1.58%.
Treasuries were little changed as stock prices traded higher.
The three-month Treasury note was yielding 0.10%, the 10-year Treasury was yielding 0.67% and the 30-year Treasury was yielding 1.42%.
The Dow rose 0.25%, the S&P 500 imcreased 0.70% and the Nasdaq gained 0.25%.
