The state of Texas competitively sold bonds in the municipal bond market on Tuesday while the Dormitory Authority of the State of New York deal was priced for retail investors.
Primary market
In the competitive arena, Texas sold $159.965 million of general obligation college student loan bonds subject to the alternative minimum tax.
Bank of America Merrill Lynch won the bonds with a true interest cost of 3.3541%.
The financial advisors are Hilltop Securities and YaCari Consultants; the bond counsel are McCall Parkhurst and Mahomes Bolden.
The deal is rated triple-A by Moody’s Investors Service and S&P Global Ratings.
Since 2009, the state of Texas has issued about $3 billion of municipal bonds, with the most issuance occurring in 2013 when it sold $661 million. The state did not come to market in 2016.
In the negotiated sector, Goldman Sachs priced for retail the Dormitory Authority of the State of New York’s $597.745 million of Series 2019A tax-exempt revenue bonds for New York University and issued price guidance on DASNY’s $248.485 million of Series 2019B-1 taxable and Series 2019B-1 taxable green bonds.
The deal is rated Aa2 by Moody’s and AA-minus by S&P.
BAML is set to price the Texas Transportation Commission’s $254 million of first tier state highway 249 system toll revenue bonds Series 2019A tax-exempts and Series 2019B taxables. The deal is rated Aa2 by Moody’s and AA-minus by S&P.
BAML priced the University of North Carolina at Chapel Hill’s $150.925 million of general revenue refunding bonds, Series 2019A&B.
The deal is rated triple-A by Moody’s, S&P and Fitch Ratings.
On Wednesday, BAML is slated to price Washington, D.C.’s $941.48 million of general obligation bonds. The bonds are rated Aaa by Moody’s and AA-plus by S&P and Fitch.
Citigroup is set to price Oregon’s $519 million of GOs on Wednesday, consisting of Series 2019A tax-exempts, Series 2019B taxable sustainability bonds, Series 2019C taxable bonds and Series 2019D tax-exempts.
The deal is rated Aa1 by Moody’s and AA-plus by S&P and Fitch.
In the competitive arena, the state of Delaware is selling $250 million of GOs on Wednesday. The financial advisor is PFM Financial Advisors; the bond counsel is Saul Ewing Arnstein.
The deal is rated triple-A by Moody’s and S&P and Kroll Bond Rating Agency.
Tuesday’s bond sales
New York
Texas
North Carolina
Bond Buyer 30-day visible supply at $8.96B
The Bond Buyer's 30-day visible supply calendar decreased $90.3 million to $8.96 billion for Tuesday. The total is comprised of $2.42 billion of competitive sales and $6.54 billion of negotiated deals.
Secondary market
Municipal bonds were mostly stronger Tuesday, according to a midday read of the MBIS benchmark scale. Benchmark muni yields fell as much as one basis point in the one- to 28-year maturities, were unchanged in the 29-year maturity and were up less than a basis point in the 30-year maturity.
High-grade munis were stronger, with muni yields falling as much as six basis points across the curve.
Municipals were weaker on Municipal Market Data’s AAA benchmark scale, which showed the yield on the 10-year muni general obligation rising as much as two basis points as the yield on the 30-year muni maturity gaining one to three basis points.
Treasury bonds were weaker as stock prices traded higher.
On Monday, the 10-year muni-to-Treasury ratio was calculated at 79.8% while the 30-year muni-to-Treasury ratio stood at 99.3%, 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.
Demand continued to outstrip supply on Monday, according to a New York trader.
“Mutual fund inflows followed by growth in the SMA space has kept optimism elevated driving municipal to Treasury ratios toward their tights of the year inside of 20 years,” the trader said.
He said customers are slowly being convinced to lengthen duration where ratios and quality spreads are more favorable.
“High-grade quality spreads remain within their historical ranges, however, other yieldier sectors have been tightening toward their tights,” he said. “Dealer positions appear to be modest at best and should be able to absorb any additional slack.”
Previous session's activity
The Municipal Securities Rulemaking Board reported 35,347 trades on Monday on volume of $10.11 billion.
California, New York and Texas were the municipalities with the most trades, with the Golden State taking 14.314% of the market, the Empire State taking 12.903% and the Lone Star State taking 11.448%.
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 $30 billion of four-week bills outstanding.
Treasury also said it will sell $35 billion of eight-week bills Thursday.
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.
