Supply sweeps in as Calif. MFA, Port of Seattle, Conn. deals sell
The municipal bond market saw several large deals hit the screens on Tuesday from issuers in California, Seattle and Connecticut.
Bank of America Merrill Lynch priced the California Municipal Finance Authority’s $1.19 billion of Series 2018 A and B senior lien revenue bonds for the automated people mover project at the Los Angeles International Airport.
The bonds are rated BBB-plus by Fitch Ratings, except for the Series 2018A 2030, 2032 and 2035 maturities and the Series 2018B 2048 maturity, which are insured by Assured Guaranty Municipal, and rated AA by S&P Global Ratings.
The payment obligations of Los Angeles International Airport that support the bonds received Fitch's A rating; the bonds will be repaid using availability payments made to the developer, but aren’t an obligation of the AA-rated Los Angeles airport authority.
Since 2008, the California Municipal Finance Authority has sold roughly $6.7 billion of securities, with the most issuance occurring in 2017 when it sold $1.66 billion and the least in 2012 when it sold $140 million.
BAML priced Connecticut’s $492.76 million of Series 2018 C and D general obligation bonds on Tuesday. The deal is rated A1 by Moody’s Investors Service, A by S&P and Fitch and AA-minus by Kroll Bond Rating Agency.
JPMorgan Securities priced the Port of Seattle’s $567.38 million of Series 2018 A and B intermediate lien revenue bonds subject to the alternative minimum tax. The deal is rated A1 by Moody’s, A-plus by S&P and AA-minus by Fitch.
Port of Seattle is operator of the Seattle-Tacoma International Airport.
“The airport, the ninth busiest in the U.S., has seen strong and sustained growth in passenger traffic, with enplanements up by 5.3% in the first four months of FY2018, per Moody’s,” according to Janney’s daily market commentary. “The Port’s aviation division contributes the majority of operating income (77%), with other income (21%) earned by the Port’s maritime operations, which have benefited from the 2015 formation of the Northwest Seaport Alliance with Port of Tacoma, making Puget Sound the fifth largest containerized cargo gateway in the U.S.”
On the competitive front, Ohio sold $300 million of Series 2018A common schools GOs. JPMorgan won the deal with a true interest cost of 3.5797%. The deal is rated AA-plus by Fitch.
Clark County School District, Nev., sold $200 million of Series 2018A limited tax GO building bonds. Citigroup won the bonds with a TIC of 3.4536%. The deal is rated A1 by Moody's and A-plus by S&P.
Seattle sold $269.99 million of Series 2018A municipal light and power improvement revenue bonds. BAML won the bonds with a TIC of 3.5286%. The deal is rated Aa2 by Moody’s and AA by S&P.
The Southern California Metropolitan Water District is selling $165.64 million of subordinate water bonds in two competitive sales consisting of $100.01 million of Series 2018A revenue refunding bonds and $65.625 million of revenue bonds. The deals are rated AA-plus by S&P and Fitch.
Tuesday’s bond sales
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NYC MWFA to sell $375M bonds
The New York City Municipal Water Finance Authority plans to sell $375 million of tax-exempt fixed-rate second general resolution revenue bonds on Tuesday, June 12. There will be a one-day retail order period on Monday, June 11.
The bonds will be sold via negotiated sale through the authority’s underwriting syndicate, led by book-running senior manager Raymond James, with Barclays Capital and Siebert Cisneros Shank & Co. serving as co-senior managers on the transaction.
Proceeds from the sale will be used to refund certain outstanding bonds.
Bond Buyer 30-day visible supply at $13.54B
The Bond Buyer's 30-day visible supply calendar increased $260.6 million to $13.54 billion on Tuesday. The total is comprised of $6.01 billion of competitive sales and $7.52 billion of negotiated deals.
Municipal bonds were mixed on Tuesday, according to a midday read of the MBIS benchmark scale. Benchmark muni yields rose less than one basis point in the 12-year and the 21- to 30-year maturities, fell as much as one basis point in the one- to 10-year and 14- to 19-year maturities and were unchanged in the 11-, 13- and 20-year maturities.
High-grade munis were also mixed, with yields calculated on MBIS’ AAA scale rising less than one basis point in the 11- to 13-year and 19- to 27-year maturities, falling as much as one basis point in the one- to nine-year and 14- to 16-year maturities and remaining unchanged in the 10-year, 17- to 18-year and 28- to 30-year maturities.
Municipals were weaker Municipal Market Data’s AAA benchmark scale, which showed yields rising as much as one basis point in the 10-year general obligation muni and gaining as much as one basis point in the 30-year muni maturity.
Treasury bonds were stronger as stock prices traded mixed.
On Monday, the 10-year muni-to-Treasury ratio was calculated at 83.1% while the 30-year muni-to-Treasury ratio stood at 95.3%, according to MMD. The muni-to-Treasury ratio compares the yield of tax-exempt municipal bonds with the yield of taxable U.S. Treasury with comparable maturities. If the muni/Treasury ratio is above 100%, munis are yielding more than Treasury; if it is below 100%, munis are yielding less.
Previous session's activity
The Municipal Securities Rulemaking Board reported 42,677 trades on Monday on volume of $9.38 billion.
California, Texas and New York were the states with the most trades, with the Golden State taking 14.169% of the market, the Lone Star State taking 9.949% and the Empire State taking 9.904%.
The most actively traded municipal security based on par amount was the San Diego County Regional Transportation Commission’s Series 2018A sales tax revenue notes 4s of 2021 which traded seven times for a total of $32 million, according to the EMMA website.
Treasury sells $35B 4-week bills
The Treasury Department Tuesday auctioned $35 billion of four-week bills at a 1.780% high yield, a price of 99.861556.
The coupon equivalent was 1.807%. The bid-to-cover ratio was 3.04.
Tenders at the high rate were allotted 38.65%. The median rate was 1.750%. The low rate was 1.700%.
Gary Siegel contributed to the 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 Vanessa Kim at 212-803-8474 for more information.