New York City Municipal Water Finance Authority's increased the size of its revenue bond deal to $530 million from $475 million in pricing for institutions on Thursday after a one-day order period for retail investors was held on Wednesday. The deal went well, according to traders, with the sale finding a "sweet spot" in the market.
Meanwhile, prices of top-rated municipal bonds ended unchanged, according to traders.
Primary Market
Citigroup Global Markets repriced the NYC MWFA's $530 million of water and sewer second general resolution revenue bonds to yield from 2.35% with a 4% coupon in 2025 to 3.00% with a 5% coupon in 2032; a split 2037 term bond was priced as 3 1/2s to yield 3.56% and as 4s to yield 3.52%; a 2039 term was priced as 5s to yield 3.20%. The bonds were originally priced for institutions to yield from 2.35% with a 4% coupon in 2025 to 3.01% with a 5% coupon in 2032; a split 2037 term bond was priced as 3 1/2s to yield 3.57% and as 4s to yield 3.52%; a 2039 term was priced as 5s to yield 3.21%.
"The larger maturities were out on the long end of the curve, giving opportunity to participate on the short end of the curve where maturities are more attractive," a New York trader said.
On Wednesday, the issue was priced for retail to yield from 2.39% with a 4% coupon in 2025 to 3.03% with a 5% coupon in 2032; the split 2037 term bond was priced as 3 1/2s to yield 3.60% and as 4s to yield 3.55%; the 2039 term was priced as 5s to yield 3.24%.
The size of the issue was raised several times from its original amount. The bonds were rated Aa2 by Moody's Investors Service and AA-plus by both S&P and Fitch.
"NYC water is a decent name and the maturities on the short end helped retail and they were able to sell it," the trader said. "The people who hold it can diversify and I think they found a sweet spot in the market."
Since 1995, the NYC MWFA has come to market with around $37 billion of debt. The largest issuance came in 2010, when the authority sold nearly $4 billion of bonds; the smallest issuance occurred in 1999, when it sold about $510 million of debt.
Additionally, two separate deals for Scottsdale, Ariz., issuers were priced.
Wells Fargo Securities priced Scottsdale's $160.415 million of general obligation refunding bonds to yield from 0.28% with a 4% coupon in 2016 to 3.55% with a 3.50% coupon in 2034. The issue is rated triple-A by Moody's, S&P and Fitch.
JPMorgan Securities priced the Scottsdale Municipal Property Corp.'s $93.57 million of excise tax revenue bonds to yield from 0.33% with a 3% coupon in 2016 to 2.98% with a 5% coupon in 2035. This issue is rated Aa1 by Moody's and triple-A by S&P and Fitch.
Also, Barclays Capital received the official award Thursday on the Board of Regents of University of Texas System's $197.97 million of Permanent University Fund Series 2015A refunding bonds. The bonds were priced to yield from 0.40% with a 2% coupon in 2016 to 3.50% with a 3.25% coupon in 2035. The issue is rated triple-A by Moody's, S&P and Fitch.
Secondary Market
Prices of top-quality municipal bonds closed flat on Thursday. The yield on the 10-year benchmark muni general obligation was steady at 2.08% from Wednesday, while the yield on 30-year GO was unchanged at 2.88%, according to the final read of Municipal Market Data's triple-A scale.
Treasury prices moved lower on Thursday on mixed economic data (strong jobless claims coupled with a weak Philadelphia Fed manufacturing report) and news the European Union talks with Greece were going nowhere.
The yield on the two-year Treasury note rose to 0.62% from 0.59% on Wednesday while the 10-year yield increased to 2.11% from 2.06% and the 30-year yield rose to 2.72% from 2.68%.
The 10-year muni to Treasury ratio was calculated at 98.3% on Thursday versus 100.6% on Wednesday, while the 30-year muni to Treasury ratio stood at 105.4% compared to 106.8%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar dropped $1.005 billion to $8.834 billion on Thursday. The total is comprised of $1.903 billion competitive sales and $6.931 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 41,826 trades on Wednesday on volume of $9.053 billion. Most active on Wednesday, based on the number of trades, was the Pennsylvania Higher Educational Facilities Authority's 2015 Series A revenue bonds for Thomas Jefferson University 4s of 2045, which traded 312 times at an average price of 99.62, with an average yield of 4.014%.
Tax-Exempt Money Market Funds See Outflows
Tax-exempt money market funds lost $1.25 billion, reducing total net assets to $259.16 billion in the week ended Feb. 16, according to The Money Fund Report, a service of iMoneyNet.com.
The average, seven-day simple yield for the 396 weekly reporting tax-exempt funds remained unchanged at 0.01%.
The total net assets of the 992 weekly reporting taxable money funds fell $21.95 billion to $2.432 trillion in the week ended Feb. 17 from $2.454 trillion in the prior week.
The average, seven-day simple yield for the taxable money funds remained at 0.02% for the fourth consecutive week.
Overall, the combined total net assets of the 1,388 weekly reporting money funds declined by $23.20 billion to $2.691 trillion in the week ended Feb. 17, which was down from $2.714 trillion in the prior week.
Christine Albano contributed to this report.
