6 groups buy NYS Thruway’s $1.6B notes; munis price into yield demand

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Municipal bond buyers had their choice of a wide variety of securities that hit the market on Monday and Tuesday — but one common theme of all investors was a search for yield. The retail pricing on Monday for the University of Connecticut’s $240 million deal demonstrated the willingness of investors to purchase lower-rated credits, a Philadelphia-based trader said.

Primary market
The New York State Thruway Authority (MIG1/SP1/NR) competitively sold $1.6 billion of Series 2019A general revenue junior indebtedness obligation anticipation notes.

Six groups won the notes: Barclays Capital, Citigroup, Goldman Sachs, JPMorgan Securities, Morgan Stanley and RBC Capital Markets. Public Resources Advisory Group is the financial advisor; Harris Beach is the bond counsel.

The notes, which carried a 4% coupon, are due Feb. 1, 2020, and were won in nine tranches. The effective rates ranged from 2.843190% to 2.841850% to 2.840510%.

The new notes replace the $1.6 billion of Series 2013A obligations (A2/AA-/NR), due May. 1, 2019, which were priced by Citigroup on Dec. 12, 2013, to yield 2.20% in four tranches – $12.66 million at 104.029% with a 3% coupon; $23 million at 109.066% with a 4%; $45.68 million at 115.199 with a 5% coupon; and $1.52 billion at 114.104 with a 5% coupon. On Dec. 11, 2013, the MMD AAA benchmark scale six-year GO munis with a 5% coupon, due 2019, were calculated at 1.56%. On Dec. 11, 2013, the MMD six-year New York munis with a 5% coupon, due 2019, were calculated at 1.64%.

In Tuesday activity, the Thruway 5% obligations of 2013 traded at a high price of 100.049 cents on the dollar, a low yield of 2.01% and at a low price of 100, a high yield of 4.883%. On Monday, the securities traded at a high price of 100.069 cents, a low yield of 2.019% and a low price of 100, a high yield of 4.883%. The 5s ($1.52 billion principal amount at issuance) were originally priced at 114.104 to yield 2.20%.

Volume totaled $575,000 in four trades on Tuesday compared to $25.43 million in 12 trades on Monday.

Since 2009, the authority has sold about $12 billion of debt, with the most issuance occurring in 2011 when it sold $2.66 billion. It did not come to market in 2015 or 2017.
Also on Tuesday, the city and county of Denver, Colo. (NR/AAA/AAA), competitively sold $135.23 million of GOs.

UBS Financial won the $81.91 million of Series 2019A Elevate Denver GOs with a true interest cost of 1.7943%. Morgan Stanley won the $53.32 million of Series 2019B Better Denver and Zoo refunding GOs with a TIC of 1.64%. Hilltop Securities is the financial advisor; Butler Snow and the Holt Group are the bond counsel.

In the negotiated sector, Morgan Stanley priced and repriced Austin, Texas’ (A1/A/NR/AA-) $152.33 million of Series 2019 airport system revenue refunding bonds subject to the alternative minimum tax.

Siebert Cisneros Shank & Co. priced and repriced the Fort Bend Independent School District, Texas (PSF: NR/AAA/AAA) $130.55 million of Series 2019B unlimited tax refunding bonds.

Barclays Capital priced and repriced the Regents of the University of Minnesota’s (Aa1/AA/NR) $156.25 million of Series 2019A GOs and Series 2019B refunding GOs.

BofA Securities priced and repriced the Maine Municipal Bond Bank’s (Aa2/AA+/NR) $127.68 million of Series 2019A bonds.

Piper Jaffray held a second day of retail orders on the University of Connecticut’s (A1/A+/A) $239.74 million of Series 2019A GOs and Series 2019A refunding GOs.

Tuesday’s bond sales

Click here for the NYS Thruway note sale

Click here for the Austin repricing

Click here for the Austin pricing

Click here for the Ft. Bend repricing

Click here for the Ft. Bend pricing

Click here for the University of Minnesota repricing

Click here for the University of Minnesota pricing

Click here for the Maine Bond Bank repricing

Click here for the Maine Bond Bank pricing

Click here for the University of Connecticut pricing

Bond Buyer 30-day visible supply at $7.44B
The supply calendar is $7.44 billion and is composed of $3.36 billion of competitive sales and $4.08 billion of negotiated deals.

Secondary market
Munis were stronger on the MBIS benchmark scale Tuesday, which showed yields falling two basis points in the 10-year maturity and slipping less than a basis point in the 30-year maturity. High-grade munis were also stronger, with yields falling two basis points in the 10-year maturity and dipping less than a basis point in the 30-year maturity.

On Refinitiv Municipal Market Data’s AAA benchmark scale, the yield on both the 10-year muni GO and the 30-year muni fell one basis point.

Treasuries were stronger as stocks traded higher.

The 10-year muni-to-Treasury ratio was calculated at 75.5% while the 30-year muni-to-Treasury ratio stood at 89.9%, according to MMD.

Previous session's activity
The MSRB reported 36,302 trades on Monday on volume of $8.54 billion. The 30-day average trade summary showed on a par amount basis of $11.58 million that customers bought $5.5 million, customers sold $3.97 million and inter-dealer trades totaled $2.11 million.

California, Texas and New York were most traded, with the Golden State taking 17.31% of the market, the Empire State taking 13.146% and the Lone Star State taking 10.06%. The most actively traded security was the NYS Thruway Series 2013A 5s of 2019 which traded 12 times on volume of $25.43 million.

Treasury to sell $50B 4-week bills
The Treasury Department said it will sell $50 billion of four-week discount bills Thursday. There are currently $34.999 billion of four-week bills outstanding.

Treasury also said it will sell $35 billion of eight-week bills Thursday.

Treasury sells bills, notes
The Treasury Department Tuesday auctioned $26 billion of 364-day bills at a 2.360% high yield, a price of 97.613778. The coupon equivalent was 2.443%. The bid-to-cover ratio was 3.44.

Tenders at the high rate were allotted 98.21%. The median yield was 2.355%. The low yield was 2.315%.

Treasury also auctioned $40 billion of two-year notes with a 2 1/4% coupon at a 2.355% yield, a price of 99.796039. The bid-to-cover ratio was 2.51.

Tenders at the high yield were allotted 47.66%. The median yield was 2.324%. The low yield was 2.250%.

Gary E. Siegel contributed to this report.

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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