NYC TFA, Minnesota price competitive deals ahead of busiest day of year

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The municipal bond market started to see supply come in, as a bunch of deals priced both on the negotiated and competitive sides. Today’s issuance was an appetizer for Wednesday, the main course that looks like it will be the busiest day of the year.

“Demand for munis continues to demonstrate unwavering retail support as the desire for tax-efficient investment has now led to 30 consecutive weeks of positive municipal bond mutual fund flows, albeit with evidence that deposit amounts may be ebbing,” Jeffrey Lipton, managing director of credit strategy at Oppenheimer & Co. said. “Beyond August, reinvestment needs are expected to taper, giving rise to a weaker supply/demand dynamic, yet we still believe that continued retail interest will drive performance through Q3 and into the fourth quarter of 2019.”

The New York City Transitional Finance Authority announced details on its sale of $1.35 billion of future tax secured tax-exempt and taxable subordinate bonds.


The TFA said the Fiscal 2020 Subseries A-1 bonds, made up of about $130 million of tax-exempt bonds due 2021 to 2024, attracted nine bidders with UBS Financial Services winning with a true interest cost of 0.988%. The cover bid from Morgan Stanley was 0.999%.

The Fiscal 2020 Subseries A-2 bonds, consisting of about $375 million of tax-exempt bonds due 2035 to 2040 and callable at par in 2029, attracted eight bidders with Barclays Capital winning with a TIC of 3.124%. The cover bid from BofA Securities was 3.132%.

The Fiscal 2020 Subseries A-3 bonds, comprised of about $345 million of tax-exempt bonds due 2041 to 2045 and callable at par in 2029, attracted eight bidders with Morgan Stanley winning with a TIC of 3.153%. The cover bid from Barclays was 3.160%.

The Fiscal 2020 Subseries A-4 bonds, made up of around $243 million of taxable bonds due 2024 to 2029, attracted six bidders with Citigroup winning with a TIC of 2.264%. The cover bid from RBC was 2.273%.

The Fiscal 2020 Subseries A-5 bonds, comprised of around $257 million of taxable bonds due 2030 to 2034 and callable at par in 2029, attracted six bidders with BofA Securities winning with a TIC of 2.710%. The cover bid from RBC was 2.778%, the TFA said.

Also, Minnesota (Aa1/AAA/AAA) sold a total of $597.59 million of bonds in a total of two separate sales.

Bank of America won the larger deal, $406.90 million of general obligation various purpose bonds with a TIC of 2.21%. BofA also won $190.69 of GO trunk highway bonds with a TIC of 2.06%.

In the negotiated arena, Loop Capital Markets priced the Pennsylvania Turnpike Commission’s (A1/NR/A+) $342.37 million of revenue bonds for retail investors.

Goldman Sachs priced the Pennsylvania Higher Educational Facilities Authority (Aa1/AA+/ ) $212.55 million of taxable refunding revenue bonds.

Morgan Stanley priced Katy Independent School District, Texas’ (Aaa/AAA/ ) $112.5 million of variable rate unlimited tax refunding bonds.

On paper, Wednesday looks like it will be the busiest day of the year, with all three billion dollar deals hitting screens — plus a bunch of smaller-sized deals.

Citi is scheduled to price CommonSpirit Health’s (Baa1/BBB+/BBB+) $5.1 billion of tax-exempt fixed rate bonds, tax-exempt hard put bonds and taxable bonds on Wednesday. CommonSpirit will issue $2.7 billion of taxable series 2019 bonds directly and the $2.4 billion series 2019A tax-exempt fixed rate bonds and $665 million series 2019B tax-exempt put bonds will be issued by conduits in Colorado, Kentucky, Tennessee and Washington.

Goldman Sachs is expected to price the Port Authority of New York and New Jersey’s (Aa3/AA-/AA-) $1.25 billion of consolidated taxable, tax-exempt and alternative minimum tax bond.

JPMorgan is slated to run the books on Dallas Fort Worth International Airport’s (A1/A+/A+/AA) $1.17 billion of joint revenue refunding taxable bonds.

Tuesday’s bond sales

Minnesota GO trunk highway competitive pricing

Minnesota GO various purpose competitive pricing

City of Philadelphia pricing

Pennsylvania HEFA pricing

Pennsylvania Turnpike Commission pricing

Secondary market
Munis were much stronger in late trading on the MBIS benchmark scale, with yields falling four basis points in both 10-year and by no more than two basis points in the 30-year maturities. High-grades were also stronger, with MBIS’ AAA scale showing yields lowering by less than two basis points in the 10-year and by two basis points in the 30-year maturities.


On Refinitiv Municipal Market Data’s AAA benchmark scale, the yield on both the 10-year and 30-year maturities dropped one basis point to 1.37% and 2.07%, respectively.

The 10-year muni-to-Treasury ratio was calculated at 78.8% while the 30-year muni-to-Treasury ratio stood at 91.6%, according to MMD.

Treasury yields were mixed and stocks were trading in the green. The Treasury three-month was yielding 2.046%, the two-year was yielding 1.609, the five-year was yielding 1.536%, the 10-year was yielding 1.724% and the 30-year was yielding 2.255%.

Previous session's activity
The Municipal Securities Rulemaking Board reported 29,905 trades Monday on volume of $9.178 billion. The 30-day average trade summary showed on a par amount basis of $10.46 million that customers bought $5.42 million, customers sold $3.07 million and interdealer trades totaled $1.97 million.

California, Texas and New York were most traded, with the Golden State taking 20.152% of the market, the Lone Star State taking 12.154% and the Empire State taking 10.73%.

The most actively traded security was the Puerto Rico Sales Tax Financing Corp., 4.329s of 2040, which traded 55 times on volume of $55.92 million.

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 Ziad Saba at 212-803-6079 for more information.

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