With a slightly drifting Treasury market and the pricing of the $3.2 billion New Jersey tobacco deal on deck, municipal investors exhibited an overwhelming concern over credit on Tuesday morning, according to one New York trader.

“The market feels OK, there is demand for the right product in here, but there are a lot of questions,” he said. “Everyone is really conscious about credit — high grade credit — double-A and above,” he added.

He said other than the attractively priced tobacco deal, investors aren’t being paid enough for lower-grade paper.

“Everyday they are reading about what’s happening in Connecticut and Illinois and that’s a really different thing for municipal investors,” he said, pointing to the fiscal turbulence in those states.

The tobacco deal, he said, is a sizable offering that should do well — despite its single-A and triple-B ratings — due to the heavy demand for yield among sophisticated investors.

Primary market
Jefferies priced the New Jersey Tobacco Settlement Financing Corp.’s Series 2018A senior and Series 2018B subordinate tobacco settlement bonds for retail investors ahead of the institutional pricing on Wednesday.

The $2.11 billion of senior bonds carried yields ranging from 2.13% with a 5% coupon in 2019 (rated A by S&P Global Ratings) to 4.125% with a 4% coupon in 2037 (rated A-minus by S&P).

The $1.11 billion of subordinate bonds, due in 2027 and 2046, were not reoffered to retail investors.

Siebert Cisneros Shank priced the New York City Municipal Water Finance Authority’s $426.14 million of Fiscal 2018 Series EE water and sewer system second resolution revenue bonds for retail investors on Tuesday ahead of the institutional pricing on Wednesday.

Citigroup issued a premarketing wire on Tuesday ahead of the pricing of the San Diego County Regional Transportation Commission’s $537.48 million of Series 2018A subordinate sales tax revenue short-term notes.

In the competitive arena on Tuesday, Albany County, N.Y., sold $152 million of Series 2018 various purpose general obligation bonds.

Raymond James & Associates won the issue with a true interest cost of 2.468%.

The California Public Work Board sold $140 million of lease revenue and refunding bonds on Tuesday.

UBS Financial won the bonds with a TIC of 2.8262%.

Rhode Island sold over $149 million of general obligation bonds in two sales.

Morgan Stanley won the $114.28 million of tax-exempts with a TIC of 3.2579%. BOK Financial won the $35.1 million of taxables with a TIC of 3.0981%.

Since 2008, Rhode Island has issued about $1.85 billion of debt, with the most issuance occurring in 2014 when it sold $336.4 million. It offered the least amount of bonds in 2009, when it issued $54.6 million of debt.

Tuesday’s bond offerings

New Jersey:
Click here for Tobacco Settlement Financing Corp. retail deal

New York:
Click here for the NYC Water retail deal

California:
Click here for the San Diego premarketing wire

Bond Buyer 30-day visible supply at $11.66B
The Bond Buyer's 30-day visible supply calendar increased $95.3 million to $11.65 billion on Tuesday. The total is comprised of $3.446 billion of competitive sales and $8.209 billion of negotiated deals.

Previous session's activity
The Municipal Securities Rulemaking Board reported 42,230 trades on Monday on volume of $8.93 billion.

California, New York and Texas were the states with the most trades, with the Golden State taking 17.076% of the market, the Empire State taking 10.503% and the Lone Star State taking 9.479%.

Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Vanessa Kim at 212-803-8474 for more information.

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