The Niagara Tobacco Asset deal received intense demand this morning, leading traders to believe that the deal may be repriced to yield even lower rates this afternoon.
After just an 18-minute order period, the $45 million deal's order period was terminated, indicating that the deal has been very well received, said a Midwest based trader.
"That short of an order period gives you a good idea of how many orders they received - a lot," said the trader.
The deal is unrated and the lead manager is Raymond James, according to data provided by TM3. The deal includes serial bonds with maturities ranging from 2015 through 2024 and three term bonds maturing in 2029, 2034, and 2040, according to data provided by Bloomberg.
The marked interest was surprising as multiple traders found the original pricing of the deal to be "too expensive" as is. The serial bonds were priced to yield from 0.56% on a 4% coupon in 2015 to 3.33% on a 5% coupon in 2024, according to Bloomberg. The term bonds were priced to yield 4.05% on a 5.25% coupon in 2029, 3.97% on a 5.25% coupon in 2034, and 4.23% on a 5.25% coupon in 2040, according to data provided by Bloomberg.
Traders expected an even "more expensive" pricing structure to be released later Tuesday.
The tobacco deal's strength comes as the municipal market scale has weakened through Tuesday morning. Bonds maturing from 2015 through 2019 and 2025 through 2036 weakened up to one basis point, while bonds maturing between 2020 and 2024 and in 2037 through 2044 have softened up to two basis points, according to the Municipal Market Data triple-A 5% scale.
No other deals over $30 million have priced on Tuesday morning, according to data provided by Ipreo.
The Treasury market also mostly weakened Tuesday morning, with the two-year note softening two basis points to 0.55% from Monday's close, the 10-year climbed two basis points to 2.49% and the 30-year held steady at 3.23%.
