The American Dream development in New Jersey, which broke ground in 2004, will have to wait a bit longer for financing as a $1.1 billion sale of unrated tax-exempt bonds to complete the project was delayed.

The deal, which had been tentatively slated for Wednesday, may be hitting the market as early as Thursday, according to a market source, who cited a scheduling conflict and said it was possible the deal could come early next week.

Goldman Sachs is the underwriter on the Wisconsin Public Finance Authority’s revenue bonds for the megamall project in East Rutherford, N.J.

The PFA is issuing the debt on behalf of the New Jersey Sports & Exposition Authority, which operates the Meadowlands District where the project is located.

The issue consists of $800 million of limited obligation PILOT revenue bonds and $300 million of limited obligation grant revenue bonds. The deal is not rated.

Secondary market
In secondary trading municipal bonds finished stronger on Wednesday after the Federal Reserve raised interest rates.

The Federal Open Market Committee voted to hike the Fed funds target rate by 25 basis points to between 1% and 1.25%. Federal Reserve Bank of Minneapolis President Neel Kashkari was the lone dissenter, preferring to hold rates steady.

The yield on the 10-year benchmark muni general obligation fell four basis points to 1.84% from 1.88% on Tuesday, while the 30-year GO yield dropped four basis points to 2.69% from 2.73%, according to the final read of Municipal Market Data's triple-A scale.

There were no hints in the FOMC’s statement about future increases, although the Summary of Economic Projections, released at the same time, showed one more this year and three next year. The statement said “near-term risks to the economic outlook appear roughly balanced, but the committee is monitoring inflation developments closely.”

The market has questioned whether there will be another rate hike, following a weak consumer price index report, dropping the probability of another hike this year to 28% from 48%, according to Bloomberg.

The Fed offered details of its balance sheet normalization. It will roll off $10 billion a month to start: $6 billion from Treasuries and $4 billion from mortgage-backed securities. The caps will rise quarterly by those amounts until they hit $30 billion for Treasuries and $20 billion for mortgage-backeds. No details about when the process will begin or the size of the Fed’s balance sheet at the end were offered.

Treasuries finished weaker after the Fed hike, though off earlier highs. The yield on the two-year Treasury fell to 1.34% from 1.36% on Monday, the 10-year Treasury yield dropped to 2.14% from 2.20% while the yield on the 30-year Treasury bond decreased to 2.78% from 2.86%.

The 10-year muni to Treasury ratio was calculated at 86.1% on Wednesday, compared with 85.2% on Tuesday, while the 30-year muni to Treasury ratio stood at 96.7% versus 95.4%, according to MMD.

MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 41,917 trades on Tuesday on volume of $7.98 billion.

Primary market
No major deals came to market on Wednesday as the market focused on the FOMC meeting in Washington.

On Thursday, Morgan Stanley is expected to price the state of Missouri’s $449.86 million of Series 2017A general obligation bonds.

The deal is rated Aa2 by Moody’s Investors Service and AA by S&P Global Ratings and Fitch Ratings.

Bank of America Merrill Lynch is expected to price the Hawaiian Electric Co. and it subsidiaries’ $265 million of special purpose revenue refunding bonds for the Department of Budget and Finance of the state of Hawaii.

The deal is rated Baa2 by Moody’s and A-minus by Fitch.

Citigroup is set to price the city of Long Beach, Calif.’s $172 million of harbor revenue bonds. The deal is rated AA by S&P and Fitch.

In the competitive arena, the Rock Hill School District No. 3 of York County, S.C., is selling $100 million of Series 2017B GOs.

The deal is rated Aa1 by Moody’s and AA by S&P.

BlackRock: Bright summer for munis
Municipal bonds posted their sixth straight month of positive returns, according to BlackRock’s June 2017 municipal market update from the muni team of Peter Hayes, head of the municipal bonds group, Sean Carney, head of municipal strategy and James Schwartz, head of municipal credit research.

“Municipals posted a positive return in May as rates fell amid continued policy uncertainty in Washington, and supported by a favorable supply/demand dynamic,” according to the report, which came out on Wednesday morning. “New issuance of $34.2 billion was down 19% versus last year and below expectations. At the same time, demand for the asset class remained firm and broad based.”

The firm, which manages $118 billion in municipal assets on behalf of clients, also said new issue supply was easily absorbed and, in fact, oversubscribed at an average rate of 4.5 times.

“Flows reflected a continued investor search for yield, with long-term and high-yield funds capturing the most assets.”

On the credit front, BlackRock said state income tax collections disappointed in April, as investors opted to defer declaring investment income in anticipation of lower tax rates.

“The weak collections exacerbate an already slow revenue growth trend and will likely test some states’ ability to balance their budgets before fiscal year-end (June 30 for most).”

The team also noted that investors remain yield-focused, favoring long-term and high-yield funds. BlackRock said it likes flexible strategies that can navigate rate and policy uncertainty.

The S&P Municipal Bond Index returned 1.32% in May and 3.49% year-to-date. Credit and long duration broadly outperformed as post-election fears continued to diminish and investors placed a premium on higher-yielding assets,” the report said.

Gary Siegel contributed reporting on the Fed to this report.

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Chip Barnett

Chip Barnett

Chip Barnett is a journalist with more than 40 years of experience. Barnett is currently Senior Market Reporter for The Bond Buyer.
Aaron Weitzman

Aaron Weitzman

Aaron Weitzman is a markets reporter for The Bond Buyer, focusing on the sell side of the municipal bond market.