Taxables, healthcare deals dominate $8.7B municipal bond calendar

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Taxable and healthcare deals dominate the upcoming week’s $8.7 billion new-issue calendar, with issuers in Oregon, Florida and Texas leading the way.

Municipal bond yields barely budged on Friday, ending the week just about where they started. Yields were steady along the AAA scales.

Primary market
IHS Ipreo estimates supply for the upcoming week at $8.7 billion. The calendar is composed of $7.4 billion of negotiated deals and $1.3 billion of competitive sales.

One of the largest deals of the week will be the PeaceHealth Obligated Group in Oregon’s $745 million of corporate CUSIP taxable bonds, which Morgan Stanley expects to price on Thursday.

The Orlando Health Obligated Group in Florida will be coming to market with $518 million of corporate CUSIP taxables. Morgan Stanley is expected to price the Series 2020A and 2020B hospital revenue bonds on Wednesday.

Medical staff at a work station in a Houston hospital's COVID-19 intensive care unit.

The healthcare sector is under a cloud of uncertainty at the moment, according to John Hallacy, founder of John Hallacy Consulting LLC.

“There is concern over whether the ACA [Affordable Care Act/Obamacare] will survive a variety of tests, including some upcoming court decisions and the elections,” he said. “Additionally, these hospitals and healthcare organization have had to grapple with the impact of COVID-19 on their financials. Any savings they can get in the bond market will help them with their budgets.”

Other healthcare deals on tap are:

  • The Missouri Health and Educational Facilities Authority’s $366 million of revenue bonds for Mercy Health to be priced by BofA Securities on Tuesday;
  • The Children’s Hospital Medical Center in Ohio’s $200 million of taxable bonds for the Cincinnati Children’s Hospital Medical Center to be priced by Goldman Sachs on Tuesday; and
  • The University of Mississippi Medical Center’s $158 million of taxable revenue bonds for the capital improvement and refinancing project for the Medical Center Educational Building Corp. to be priced by Raymond James on Wednesday.

The North Texas Tollway Authority is coming to market with a $518 million deal. BofA is set to price the Series 2020B taxable first tier revenue refunding bonds on Thursday.

Louisiana is set to offer $435 million of refunding bonds. Raymond James & Associates will price the deal on Wednesday.

Another deal of interest is coming from a Puerto Rico issuer. The Puerto Rico Housing Finance Authority will be issuing $249 million of capital fund modernization program refunding bonds for Puerto Rico public housing projects. Goldman Sachs will price the bonds on Tuesday.

Atlanta will be in the market on Tuesday with $366 million of airport general revenue refunding bonds. JPMorgan Securities will be pricing the refunding deal, which includes bonds subject to the alternative minimum tax and non-AMT bonds.

Atlanta’s sale will come on the heels of Chicago’s $1.2 billion offering for O’Hare International Airport on Thursday.

"In the largest U.S. airport bond sale since the onset of the COVID-19 pandemic, the city will achieve approximately $257 million in savings after selling approximately $1.2 billion O’Hare International Airport general airport senior lien revenue bonds to refinance existing airport bonds," said Jennie Huang Bennett, the city’s chief financial officer. "Savings from the transactions will strengthen the airport’s long-term fiscal health. These refinancing savings, along with CARES funding and operating efficiencies at the airport, lock-down a holistic two-year finance plan in a time of considerable uncertainty. High investor demand is reflective of confidence in O’Hare’s essential importance to the national aviation system and the Midwestern economy and allowed O’Hare to price at favorable spreads vs. other recent airport transactions."

In July, Dallas and Fort Worth, Texas, sold $1.19 billion of taxable revenue refunding bonds for the Dallas-Fort Worth International Airport.

In the competitive arena, the Massachusetts School Building Authority will sell $395 million of Series 2020C taxable senior dedicated sales tax refunding bonds on Wednesday.

PFM Financial Advisors is the financial advisor; Mintz Levin is the bond counsel.

Bond Buyer indexes move lower
The weekly average yield to maturity of the Bond Buyer Municipal Bond Index, which is based on 40 long-term bond prices, fell one basis point to 3.57% from 3.58% the week before.

The Bond Buyer's 20-bond GO Index of 20-year general obligation yields dropped one basis point to 2.21% from 2.22% in the previous week.

The 11-bond GO Index of higher-grade 11-year GOs decreased one basis point to 1.74% from 1.75%.

The Bond Buyer's Revenue Bond Index declined one basis point to 2.71% from 2.72%.

Secondary market
High-grade municipals were unchanged Friday, according to final readings on Refinitiv MMD’s AAA benchmark scale. Yields were flat in 2021 and 2022 at 0.12% and 0.13%, respectively. The yield on the 10-year muni was flat at 0.83% while the 30-year yield remained at 1.58%.

The 10-year muni-to-Treasury ratio was calculated at 125.6% while the 30-year muni-to-Treasury ratio stood at 111.7%, according to MMD.

"Muni bonds are ending the week unchanged," ICE Data Services said. "Trade volumes are seeing a significant drop from yesterday. Muni percentage of Treasury yields are generally above 100% across the curve."

The ICE AAA municipal yield curve showed all maturities steady, with the 2021 maturity at 0.12%, the 2022 maturity at 0.13%, the 10-year maturity at 0.80% and the 30-year at 1.60%. The 10-year muni-to-Treasury ratio was calculated at 127% while the 30-year muni-to-Treasury ratio stood at 112%, according to ICE.

The IHS Markit municipal analytics AAA curve showed the 2021 maturity yielding 0.15%, the 2022 maturity at 0.16%, the 10-year muni at 0.87% and the 30-year at 1.61%.

The BVAL AAA curve showed the yield on the 2021 maturity unchanged at 0.11%, the 2022 maturity unchanged at 0.13%, the 10-year steady at 0.80% and the 30-year flat at 1.59%.

Treasuries were little changed as stock prices rose.

The three-month Treasury note was yielding 0.09%, the 10-year Treasury was yielding 0.66% and the 30-year Treasury was yielding 1.41%.

The Dow rose 1.25%, the S&P 500 increased 1.48% and the Nasdaq gained 2.14%.

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Primary bond market Secondary bond market North Texas Tollway Authority State of Louisiana City of Atlanta, GA Commonwealth of Puerto Rico O'Hare Airport
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