Texas sells $8B notes to 15 groups

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Texas came to market with $8 billion of tax-exempt notes on Wednesday much to the delight of buyers who have a voracious appetite for short-term municipal paper.

Primary market
Texas (MIG1/SP1+/F1+/K1+) competitively sold the Series 2019 tax and revenue anticipation notes.

Fifteen groups all took a piece of the TRANs sale. These firms included BofA Securities, Barclays Capital, Citigroup, FTN Financial Capital Markets, Goldman Sachs, Hutchinson Shockey, Janney, Loop Capital Markets, Morgan Stanley, RBC Capital Markets, Stephens, SWBC Investment Services, TD Securities, UBS Financial Services and Wells Fargo Securities. George K. Baum was the financial advisor; Orrick Herrington was the bond counsel.

“Given its size, the deal did very well, with 15 dealers winning in the competitive auction,” said Dan Urbanowicz, director and fixed income portfolio manager at Ziegler Capital Markets. “I saw reofferings starting at 1.30% and up to 1.25%, which is roughly equal to the 10-year AAA scale,” he said.

“This was a great opportunity to pick up extra yield on the very short end of the curve,” he added.

The Texas TRAN 4s [CUSIP: 882724PY7], priced at 102.657 to yield 1.25%, were freed to trade in the afternoon and were the most active securities traded, according to the MSRB’s EMMA website. The 4s were trading at a high price 102.688, a low yield of 1.219%. Activity was brisk with 118 trades on volume of about $371 million.

This was the state's annual note sale and the biggest since 2012; Texas sells notes annually to cover cash-flow gaps, especially for school districts. It had enough revenues on hand that it didn’t need to come to market in 2015 or 2016.
Citigroup received the written award on Houston’s (Aa2/AA/NR) $770.965 million of combined utility system first lien revenue refunding bonds that it priced on Tuesday. That deal consisted of Series 2019B refunding bonds, Series 2020A forward delivery bonds and Series 2019C taxable bonds.

Ramirez & Co. said it will price Houston, Texas’ (Aa3/AA/NR) $483.5 million of public improvement refunding bonds on Thursday. This deal consists of $275 million of Series 2019A bonds, $185 million of Series 201BC taxables, $160 million of Series 2019B refunding bonds and $23.5 million of Series 2019C forward delivery bonds.

Goldman Sachs priced San Antonio, Texas’ (Aa1/AA/AA+) $114.69 million of New Series of 2019 electric and gas systems revenue refunding bonds. Raymond James and Siebert Cisneros Shank ate co-managers. PFM and Estrada Hinojosa are the financial advisors. Norton Rose Fulbright and Kassahn and Ortiz are the bond counsel.

Morgan Stanley priced the North Carolina Municipal Power Agency Number 1’s $102.125 million of Catawba Electric revenue bonds refunding series 2019A (NR/A/A) and refunding Series 2019B (NR/A-E/A).

BofA priced the Bucks County Industrial Development Authority, Pennsylvania’s (A3/A-/NR) $100 million of Series 2019 hospital revenue bonds for the St. Luke's University Health Network project.

Wells Fargo Securities priced the Wisconsin Housing and Economic Development Authority’s (Aa2/AA/NR) $125 million of Series 2019C non-AMT home ownership revenue bonds.

JPMorgan Securities priced Oregon’s (Aa2/NR/NR) $99 million of Series 2019A non-AMT Housing and Community Services Department’s mortgage revenue bonds for the single-family mortgage program.

RBC Capital Markets received the official award on the Minnesota Housing Finance Agency’s (Aa1/AA+/NR) $156.015 million of residential housing finance bonds consisting of Series 2019 E bonds subject to the alternative minimum tax, Series 2019F non-AMT bonds and Series 2019G taxable bonds.

Wednesday’s bond sales
Click here for the Texas TRANs sale

Click here for the Houston award

Click here for the San Antonio pricing

Click here for the North Carolina pricing

Click here for the Wisconsin pricing

Click here for the Oregon pricing

Click here for the Minnesota award

Click here for the Bucks County repricing

Click here for the Bucks County pricing

ICI: Muni funds see $1.9B inflow
Long-term municipal bond funds and exchange-traded funds saw a combined inflow of $1.888 billion in the week ended Aug. 14, the Investment Company Institute reported on Wednesday.

It was the 33rd straight week of inflows into the tax-exempt mutual funds and followed an inflow of $2.872 billion in the previous week.
Long-term muni funds alone saw an inflow of $1.632 billion after an inflow of $2.441 billion in the previous week; ETF muni funds alone saw an inflow of $255 million after an inflow of $432 million in the prior week.

Taxable bond funds saw combined inflows of $8.151 billion in the latest reporting week after outflows of $5.484 billion in the previous week.

ICI said the total combined estimated inflows from all long-term mutual funds and ETFs were $10.034 billion after revised outflows of $25.579 billion in the prior week.

Secondary market
Munis were little changed in late trade on the MBIS benchmark scale, with yields falling less than one basis point in the 10-year maturity and rising by less than a basis point in the 30-year maturity. High-grades were mixed, with MBIS’ AAA scale showing yields falling one basis point in the 10-year maturity and rising less than a basis point in the 30-year maturity.

Yields were mixed on Refinitiv Municipal Market Data’s AAA benchmark scale, with the 10-year muni GO rising one basis points to 1.24% and the 30-year ermaining unchanged at 1.90%.

“Muni yields are drifting slightly higher today on light volume,” ICE Data Services said in a Wednesday market comment. “High-yield issues are mixed, taxables are two basis points higher with Treasuries.”

The 10-year muni-to-Treasury ratio was calculated at 78.7% while the 30-year muni-to-Treasury ratio stood at 92.7%, according to MMD.

Treasuries were weaker as stocks traded higher. The Treasury three-month was yielding 1.974%, the two-year was yielding 1.569%, the five-year was yielding 1.469%, the 10-year was yielding 1.567% and the 30-year was yielding 2.048%.
Previous session's activity
The MSRB reported 31,352 trades Tuesday on volume of $9.37 billion. The 30-day average trade summary showed on a par amount basis of $11.13 million that customers bought $5.68 million, customers sold $3.35 million and interdealer trades totaled $2.10 million.

California, Texas and New York were most traded, with the Golden State taking 15.992% of the market, the Lone Star State taking 13.841%and the Empire State taking 12.519%.

The most actively traded security was the Puerto Rico GDB Debt Recovery Authority taxable 7.5s of 2040, which traded 44 times on volume of $88.94 million.

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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