Municipal bond traders are seeing the start of the week's big new issues come to market, led on Tuesday by several large water deals from issuers in Texas and California.
Ramirez & Co. priced Austin's $251.86 million of Series 2016 water and wastewater system revenue refunding bonds.
The issue was priced as 5s to yield from 0.95% in 2019 to 1.20% in 2021 and from 1.71% in 2025 to 2.59% in 2037. A 2041 maturity was priced to yield 2.71% and a 2045 maturity was priced to yield 2.76%.
Proceeds will refund 2006 and 2007 debt for savings and take out $190 million in commercial paper.
Based on rates available on March 28, the refunding could produce $12.1 million in present value savings or 10.94%, according to Austin Treasurer Art Alfaro. "Actually, I think rates have gotten even better since then," Alfaro said.
Robin Redford, managing director, and Lorraine Palacios, senior vice president, are lead bankers for Ramirez. Dennis Waley, managing director at Public Financial Management, is financial advisor on the deal. Co-managers in the underwriting syndicate are Coastal Securities, Fidelity Capital Markets, Goldman Sachs, Morgan Stanley and Raymond James. McCall, Parkhurst & Horton is bond counsel.
The deal is rated Aa2 by Moody's Investors Service, AA by S&P Global Ratings and AA-minus by Fitch Ratings.
Since 2006, Austin has sold about $7 billion of bonds including the current issue, with the largest issuance occurring in 2015 when it offered $1 billion of securities. It sold the least amount of debt in 2007 when is issued $287 million of bonds.
In the competitive arena on Tuesday, the city and county of San Francisco's Public Utilities Commission will sell over $308 million of bonds in two separate offerings, one of which is a large green bond offering.
The sales consist of $240.58 million of Series 2016A wastewater revenue green bonds and $67.82 million of Series 2016B wastewater revenue bonds. Both deals are rated Aa3 by Moody's and AA by S&P.
The California Department of Water Resources is competitively selling $107.74 million of Series AV Central Valley Project water system revenue bonds on Tuesday. The deal is rated Aa1 by Moody's and triple-A by S&P.
And the city and county of Denver's Board of Water Commissioners is competitively selling $152.16 million of water bonds in two separate issues. The offerings consist of $90.50 million of Series 2016A master resolution water revenue bonds and $61.67 million of Series 2016B master resolution water refunding revenue bonds. The deals are rated triple-A by Moody's, S&P and Fitch.
On Wednesday, Chicago is coming to market with a $546 million sale of tax-exempt and taxable and second lien water revenue bonds. PNC Capital Markets is expected to price the deal. The issue is rated AA by Kroll Bond Rating Agency.
Also on Wednesday, the Alameda Corridor Transportation Authority, Calif., will be coming to market with the biggest deal of the week. Bank of America Merrill Lynch is set to price the authority's $662 million of Series 2016 A&B tax-exempt subordinate and second subordinate lien revenue refunding bonds.
The Series A bonds are rated Baa2 by Moody's and BBB-plus by S&P and Fitch. The Series B bonds are rated Baa2 by Moody's and BBB by S&P and Fitch.
Also from California, Loop Capital Markets is expected to price the Los Angeles International Airport's $293 million of Series 2016A subordinate revenue bonds on Wednesday. The deal, which is subject to the alternative minimum tax, is rated A1 by Moody's and AA-minus by S&P and Fitch.
Morgan Stanley is set to price the state of Oregon's $306 million of Series 2016 D, E, F, G and H Article XI-M seismic projects and Article XI-Q state projects general obligation bonds on Wednesday.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $1.03 billion to $14.38 billion on Tuesday. The total is comprised of $6.55 billion of competitive sales and $7.83 billion of negotiated deals.
Secondary Market
U.S. Treasuries were little changed on Tuesday. The yield on the two-year Treasury inched up to 0.72% from 0.71% on Monday, while the 10-year Treasury yield slipped to 1.75% from 1.76% and the yield on the 30-year Treasury bond decreased to 2.61% from 2.62%.
Top-rated municipal bonds finished steady on Monday. The yield on the 10-year benchmark muni general obligation was steady from 1.57% on Friday, while the 30-year muni yield was flat from 2.49%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated at 89.4% on Monday compared with 88.4% on Friday, while the 30-year muni to Treasury ratio stood at 95.1% versus 94.7%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 33,567 trades on Monday on volume of $7.22 billion.
Richard Williamson contributed to this report
