Muni yields were unchanged Tuesday as deals from issuers in Virginia, California, Nebraska and New York hit the market.
The market will next turn its attention toward the largest deal of the week and most anticipated sale so far this year, from the Chicago Board of Education. The pre-marketing offerings for the $875 million deal were released on Tuesday, ahead of the official pricing on Wednesday.
On Wednesday JPMorgan Securities is scheduled to price the Chicago BOE's unlimited tax general obligation bonds with dedicated revenues.
The issue is slated to consist of $795.52 million of Series 2016A tax-exempt GOs in three term maturities of 2035, 2040 and 2044. The $79.49 million of Series 2016B taxables are tentatively structured as a 2033 bullet.
A preliminary scale marketing the bonds was released on Tuesday ahead of the formal pricing. Per the scale, the scale offered the 20-year maturity at a 7.70% yield, which is 524 basis points over the Municipal Market Data's triple-A benchmark and 429 basis points more than what a triple-B borrower pays. The deal carries junk ratings from Fitch and S&P but a triple-B from Kroll Bond Rating Agency.
The 25-year and final 28-year maturities were offering a preliminary yield of 7.75%, 506 basis points over MMD's AAA scale, and 502 basis points, respectively. Both were greater than 400 basis points over a BBB credit.
The preliminary price on the taxable, 17-year maturity offered a yield of 9.75% with a coupon of 9.50%.
The Chicago BOE comes to market amid rating downgrades, state takeover talk and a cash crunch. S&P cut the CPS two notches to B-plus while Fitch chopped its rating by three notches, also to B-plus. The schools get their highest marks from Kroll Bond Ratings Agency, which gives the Board of Ed a grade of triple-B.
Since 2005, the windy city BOE has sold about $6.9 billion of bonds, with the greatest issuance occurring in 2009 and 2010 when it issued $1.1 billion and $845 million, respectively. The board didn't come to market in 2014 and issued only $356 million in 2006. The BOE has issued an average of 2.6 times a year since 2005.
Also on Wednesday, the Massachusetts Clean Water Trust will be competitively selling $211.44 million of Series 19 state revolving fund green bonds. The issue is rated triple-A by Moody's, S&P and Fitch.
Primary Market
On Tuesday, Fairfax County, Va., sold $344.84 million of Series 2016A public improvement and refunding bonds. Morgan Stanley won the bidding with a true interest cost of 2.45%. The bonds were priced to yield from 0.30% with a 5% coupon in 2016 to 2.46% with a 5% coupon in 2035. The deal is rated triple-A by Moody's Investors Service, Standard & Poor's and Fitch Ratings.
Ramirez & Co. priced Nassau County, N.Y.'s $273 million of Series 2016A GO general improvement bonds on Tuesday. The bonds were priced to yield from 0.55% with a 2.5% coupon in 2017 to 3.21% with a 5% coupon in 2039. The deal is rated A2 by Moody's, A-plus by S&P and A by Fitch.
Wells Fargo Securities priced the Airport Commission of the City and County of San Francisco's $234.79 million of second series revenue refunding bonds for the San Francisco International Airport on Tuesday. The bonds were priced to yield from 1.16% with a 3% coupon and a 5% coupon in a split 2021 maturity to yield 2.51% with a 5% coupon in 2032. The deal is rated A1 by Moody's and A-plus by S&P and Fitch.
Goldman Sachs priced and then re-priced the Nebraska Public Power District's $139.7 million of general revenue bonds. The $70.88 million of Series A bonds were priced to yield 0.89% with a 5% coupon in 2019, from 1.96% with a 5% coupon in 2025 to 2.47% with a 5% coupon in 2029, and from 2.64% with a 5% coupon in 2031 to 3.33% with a 3.25% coupon in 2036. A term bond in 2041 was priced as 5s to yield 3.15%.
The $68.82 million of Series B bonds were priced as 5s to yield 0.89% in 2019, from 2.47% with a 5% coupon in 2029 to 2.71% with a 5% coupon in 2032, 2.82% with a 5% coupon in 2034 and from 2.92% with a 5% coupon in 2036 to 2.97% with a 5% coupon in 2037. A term bond in 2040 was priced as 5s to yield 3.12%. The deal is rated A1 by Moody's and A-plus by both S&P and Fitch.
Secondary Market
The yield on the 10-year benchmark muni general obligation was steady from 1.75% on Monday, while the 30-year muni yield was unchanged at 2.75%, according to a final read of Municipal Market Data's triple-A scale.
Treasuries were stronger at Tuesday's close. The yield on the two-year Treasury dipped to 0.84% from 0.87% on Monday, while the 10-year Treasury yield fell to 1.99% from 2.02% and the 30-year Treasury bond yield decreased to 2.78% from 2.80%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 87.8% compared to 86.5% on Monday, while the 30-year muni to Treasury ratio stood at 98.9% versus 98.1%, according to MMD.
