Pennsylvania competitively sold $990.55 million of unlimited tax general obligation bonds on Wednesday while the Dormitory Authority of the State of New York offered tax-exempts and taxables to fund various tech projects at New York University.
In secondary market trading, top-quality municipal bonds finished steady, according to traders.
Citigroup won the Keystone State's GOs with a true interest cost of 2.58%.
The deal was well received, according to one trader, who said the longer-dated maturities sold out quickly.
The $355 million of First Series 2016 GOs were priced to yield from 0.68% with a 5% coupon in 2017 to about 3.229% with a 3.125% coupon in 2036. The 2025 and 2034-2046 maturities are insured by Assured Guaranty Municipal.
The $635.55 million of First Refunding Series of 2016 GOs were priced as 5s to yield from 0.70% in 2016 to 2.50% in 2027.
The Pennsylvania bonds are rated Aa3 by Moody's Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings except for the AGM-insured 2025 and 2034-2036 maturities, totaling $91.75 million, which are rated Aa3 by Moody's and AA by S&P and AA-minus by Fitch.
"The Pennsylvania deal looked cheap to me. It appears they had enough interest going into the bidding to buy it with some balances," said a New York trader. "I suspect they closed the deal by taking bonds down themselves. The market was definitely more active today than on Tuesday and will be even more so on Thursday."
Public Financial Management is the financial advisor on the sale and Ballard Spahr is bond counsel.
Since 2006, the state has sold about $15 billion of debt, with the most issuance occurring in 2010 when it issued $2.69 billion and the least issuance coming in 2008 when it sold $705.2 million.
DASNY came to market with two separate negotiated deals totaling about $832 million for New York University. The bonds will fund various university projects in science, technology engineering and math (STEM).
Morgan Stanley priced DASNY's $585.16 million of Series 2016A tax-exempt revenue bonds for retail investors early on Wednesday and for institutions later in the day.
The issue was priced to yield from 1.17% with a 4% coupon in 2021 to 2.51% with a 5% coupon in 2036; a split 2039 term bond was priced as 4s to yield 2.88% and as 5s to yield 2.57%; a 2041 step-coupon bond was priced at par to yield 2.125% at par while a 2041 term bond was priced as 4s to yield 2.90%; and a 2043 term was priced as 4s to yield 2.91%.
The bonds are rated Aa3 by Moody's and AA-minus by S&P.
Wells Fargo Securities priced DASNY's $246.8 million of Series 2016B taxable revenue bonds for NYU on Wednesday. Pricing information wasn't available. These bonds are also rated Aa3 by Moody's and AA-minus by S&P.
Goldman Sachs priced the Illinois Finance Authority's $136.85 million of Series 2016A revenue refunding bonds for the Northwest Community hospital.
The issue was priced to yield from 1.27% with a 5% coupon in 2019 to 3.44% with a 4% coupon in 2038. The deal is rated A2 by Moody's and A-plus by S&P.
Bank of America Merrill Lynch priced the Rhode Island Commerce Corp.'s $229.07 million of R.I. Department of Transportation's Series 2016A grant anticipation refunding bonds.
The issue was priced to yield from 1.24% with 3% and 5% coupons in a split 2019 maturity to 2.01% with 4% and 5% coupons in a split 2024 maturity. The bonds are rated A2 by Moody's and AA-minus by S&P.
On Thursday, Citigroup is scheduled to price El Paso, Texas' $251 million of GO and combination tax and revenue bonds. The deal is rated AA by S&P and Fitch.
Barclays Capital is set to price the Sacramento Municipal Utility District, Calif.'s $149.48 million of Series 2016D tax-exempt electric revenue refunding bonds in Thursday. The deal is rated Aa2 by Moody's and AA-minus by S&P and Fitch.
Citi is expected to price the Board of Trustees of Oakland University, Mich.'s $112 million of general revenue bonds on Thursday. The deal is rated A1 by Moody's.
Ramirez: Manageable Supply for the Week
"We think the new issue supply, at $4.7 billion, or 54% of the 12 week moving average, is manageable, led by $836 million NYU revs and $990 million Pa. GO deal, selling competitively," Ramirez & Co. Managing Director Peter Block wrote in a research note released on Tuesday.
Ramirez continues to see net negative issuance for the year.
"We forecast gross supply at $378 billion in 2016 and continued negative net issuance. Gross supply through April 2016 was $120.38 billion, while net supply was $12.30 billion. We see net muni market supply at -$16.31 billion over the next 30 days, a reversal of the year-to-date trend."
Block highlighted several states that would see shrinking supply.
"Of the 10 states with the most outstanding debt, New York stands to shrink the most (1.5%), followed by New Jersey (1.3%), and Ohio (1.0%)," Block wrote. "Conversely, Washington is set to expand the most (1.1%), followed by Texas (0.3%).
Secondary Market
Top-rated munis finished flat on Wednesday. The yield on 10-year benchmark muni general obligation on Tuesday was unchanged from 1.66% on Thursday, while the 30-year muni yield was flat at 2.45%, according to the final read of Municipal Market Data's triple-A scale.
U.S. Treasuries were narrowly mixed on Wednesday. The yield on the two-year Treasury rose to 0.89% from 0.87% on Tuesday, while the 10-year Treasury yield was unchanged from 1.84% and the yield on the 30-year Treasury bond decreased to 2.62% from 2.63%.
The 10-year muni to Treasury ratio was calculated at 90.1% on Wednesday compared to 90.6% on Tuesday, while the 30-year muni to Treasury ratio stood at 93.4% versus 93.2%, according to MMD.
