Municipals finished mixed on Tuesday, traders said, as activity in the primary sector got underway.
Several large deals hit the market, with offerings from issuers in Wisconsin, Kentucky and Texas leading the way.
Primary market
The state of Wisconsin came to market with $686.59 million of tax-exempt and taxable bonds in two separate sales on Tuesday.
Wells Fargo Securities priced the state’s $402.14 million of Series 2017C taxable general fund annual appropriation refunding bonds.
The deal was priced at par to yield from 1.20% in 2018, or about 15 basis points above the comparable Treasury security, to 3.154% in 2027, or about 85 basis points above the comparable Treasury security.
The deal is rated Aa3 by Moody’s Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.
JPMorgan Securities priced and repriced the state’s $284.45 million of Series 2017-1 transportation revenue bonds.
The deal was repriced as 5s to yield from 1.18% in 2020 to 2.86% in 2037.
This deal is rated Aa2 by Moody’s, AA-plus by S&P and Fitch and triple-A by Kroll Bond Rating Agency.
“As to the Wisconsin deal, I was indifferent as to the tax-exempts at those levels,” one New York trader said, “but I liked the taxables at 85 basis points over the 10-year.”
Bank of America Merrill Lynch priced and repriced the Kentucky Economic Development Finance Authority’s $473.37 million of Series 2017 A and B hospital revenue refunding bonds for Owensboro Health on Tuesday.
The $434.72 million of Series 2017A bonds were repriced as 5s to yield from 1.69% in 2018 to 3.93% in 2032. A split 2037 maturity was priced as 4s to yield 4.12% and as 5s to yield 4.18%; a split 2041 maturity was priced as 5s to yield 4.24% and 5 1/4s to yield 4.14%; and a split 2045 maturity was priced as 4s to yield 4.23% and as 5s to yield 4.30%.
The $38.66 million of Series 2017B bonds were priced as 3 3/4s to yield 3.85% in 2031 and 3.93% in 2032 and as 4s to yield 4.12% in 2037 and as 5s to yield 4.25% in 2040.
The deal is rated Baa3 by Moody’s and BBB by Fitch except for the half of the Series 2017A 2037 and 2045 maturities and Series 2017B 2031, 2032 and 2037 maturities, which total $100.55 million, are insured by Assured Guaranty Municipal and rated A2 by Moody’s and AA by S&P Global Ratings.
Since 2007, the Kentucky EDFA has issued roughly $3.51 billion of securities, with the most issuance occurring in 2009 when it sold roughly $769 million. The authority did not come to market at all in 2014 and has issued less than $100 million three other years during that time period.
“Assured Guaranty is pleased to partner with Owensboro Health, BAML and Castle Advisory, assisting to optimize the structure of the transaction and helping to provide the issuer with significant savings,” said Leigh Nader, managing director at Assured Guaranty.
Raymond James & Associates priced and repriced the Richardson Independent School District, Texas’ $198.74 million of Series 2017 unlimited tax school building bonds on Tuesday.
The issue was priced to yield from 0.84% with a 3% coupon in 2018 to 3.19% with a 5% coupon in 2039; a 2042 maturity was priced as 5s to yield 3.24%.
The deal, backed by the Permanent School Fund guarantee program, is rated triple-A by Moody’s and S&P.
Citigroup received the written award on the Austin Convention Enterprises Inc.’s $194.66 million of convention center hotel bonds. The issuer is a non-profit public facility corporation acting on behalf of the City of Austin, Texas.
The $135.34 million of Series 2017A first tier revenue refunding bonds were priced as 5s to yield from 1.33% in 2018 to 3.63% in 2034.
The $59.32 million of Series 2017B second tier revenue refunding bonds were priced as 5s to yield from 1.68% in 2018 to 3.83% in 2030, 3.89% in 2032 and 4.03% in 2034.
The deal is rated BBB-plus by S&P.
Secondary market
The yield on the 10-year benchmark muni general obligation wasThe yield on the 10-year benchmark muni general obligation was unchanged from 2.18% on Monday, while the 30-year GO yield increased one basis point to 3.06% from 3.05%, according to the final read of Municipal Market Data's triple-A scale.
U.S. Treasuries were stronger on Tuesday. The yield on the two-year Treasury fell to 1.26% from 1.28% on Monday, while the 10-year Treasury yield declined to 2.29% from 2.32%, and the yield on the 30-year Treasury bond decreased to 2.98% from 3.01%.
The 10-year muni to Treasury ratio was calculated at 95.2% on Tuesday, compared with 93.8% on Monday, while the 30-year muni to Treasury ratio stood at 102.8%, versus 101.3%, according to MMD.
MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 37,419 trades on Monday on volume of $8.75 billion.
