Pa. sells $1.25B general obligations, Grand Parkway's $893M deal prices

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The municipal bond market welcomed Pennsylvania’s big competitive sale and the Grand Parkway negotiated deal from Texas on Wednesday as munis were little changed in midday action.

Primary market
In the competitive arena, Pennsylvania competitively sold $1.25 billion of its First Series of 2018 general obligation bonds.

Bank of America Merrill Lynch won the bonds with a true interest cost of 3.6161%.

Proceeds will be used to finance various capital projects.

Assured Guaranty Municipal insured about $241.08 million of the deal, by backing the 2033, 2034 and 2039 maturities.

Since 2008, Pennsylvania has sold over $16 billion of debt with the most issuance occurring in 2016 when is offered $2.84 billion. It sold the least amount of bonds in 2008, when it offered $705.2 million of securities.
In the negotiated sector on Wednesday, Goldman Sachs priced the Grand Parkway Transportation Corp.’s $893.13 million of subordinate tier toll revenue bonds.

And Citigroup is expected to price the city and county of San Francisco Airport Commission’s $914 million of second series revenue and revenue refunding bonds.

J.P. Morgan Securities received the written award on Mesa Ariz.’s $112.12 million of Series 2018 utility systems revenue bonds.

The deals came a day after the New York City Transitional Finance Authority sold $1.1 billion Fiscal 2018 future tax secured tax-exempt and taxable subordinate bonds.

The $122 million of Subseries C-1 tax-exempt bonds maturing in 2020 through 2024 attracted nine bidders with Goldman Sachs winning at a true interest cost of 2.094%. The cover bid from UBS Financial Services was 2.097%. The $329 million of Subseries C-2 tax-exempt bonds maturing in 2032 through 2038 attracted seven bidders with Bank of America Merrill Lynch winning at a TIC of 3.6953%. The cover bid from JPMorgan Securities was 3.6954%. The $399 million of Subseries C-3 tax-exempt bonds maturing in 2039 through 2045 attracted seven bidders with JPMorgan winning with a TIC of 3.873%. The cover bid from Citigroup was 3.876%.

The $137 million of Subseries C-4 taxable bonds maturing in 2024 through 2028 attracted eight bidders with Morgan Stanley winning with a TIC of 3.673%. The cover bid from JPMorgan was 3.709%. The $113 million of Subseries C-5 taxable bonds maturing in 2029 through 2031 attracted eight bidders with UBS winning with a TIC of 3.894%. The cover bid from Jefferies was 3.936%.

Wednesday bond sales

Click here for the state sale

Click here for the Grand Parkway Transportation deal

Click here for the Mesa deal

Secondary market
Municipal bonds were mostly weaker on Wednesday, according to a midday read of the MBIS benchmark scale. Benchmark muni yields rose as much as one basis point in the four- to 30-year maturities and fell less than a basis point in the one- to three-year maturities.

High-grade munis were mixed, with yields calculated on MBIS’ AAA scale rising as much one basis point in the 10- to 12-year and 15- to 30-year maturities and falling less than a basis point in the one- to nine-year and 13 and 14-year maturities.

Municipals were weaker according to Municipal Market Data’s AAA benchmark scale, which showed yields raising by as much as one basis point in the 10-year general obligation muni and up as much as one basis point in the the 30-year muni maturity.

Treasury bonds were weaker, with the 10-year yield remaining above the 3% level as stocks were trading mixed.

On Tuesday, the 10-year muni-to-Treasury ratio was calculated at 81.7% while the 30-year muni-to-Treasury ratio stood at 94.6%, according to MMD.

Bond Buyer 30-day visible supply at $12.92B
The Bond Buyer's 30-day visible supply calendar decreased $849.4 million to $12.92 billion on Wednesday. The total is comprised of $5.03 billion of competitive sales and $7.89 billion of negotiated deals.

Previous session's activity
The Municipal Securities Rulemaking Board reported 42,120 trades on Tuesday on volume of $9.47 billion.

California, New York and Texas were the states with the most trades, with the Golden State taking 15.024% of the market, the Empire State taking 13.473% and the Lone Star State taking 9.002%.

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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