Transportation issues took center stage on Thursday as deals from issuers in Florida and New York came to market while muni yields continued to move lower.
Primary Market
Raymond James & Associates priced Miami-Dade County’s (NR/A/A/AA-) $282.18 million of Series 2019A aviation revenue bonds subject to alternative minimum tax.
The deal was priced as 5s to yield 2.85% in 2044, as 4s to yield 3.13% in 2044 and 5s to yield 2.94% in 2049.
The New York Metropolitan Transportation Authority (A1/A/AA-/AGM insurance on the 2049 tranche: A2/AA/AA- for the 2050 and 2052s) competitively sold $179.19 million of Series 2019B transportation revenue climate bond certified by the
BofA Securities won the issue with a true interest cost of 3.809%.
The deal was priced as 4s to yield 3% in 2049 and 3.05% in 2050 and as 5s to yield 2.89% in 2052.
Public Resources Advisory Group and Rockfleet Financial Services were the financial advisors; Nixon Peabody and D. Seaton & Associates were the bond counsel.
The supply/demand imbalance in the muni market have been the same for a while now: Heavy demand and light issuance. Weeks such as this one that feature few large deals only exacerbate this dynamic, analysts said.
Take, for example, Shreveport, Louisiana’s (AGM: A2/AA/NR) $100 million water and sewer revenue bond deal that priced on Tuesday.
"The Shreveport sewer [deal received] almost 20 times-over in term bonds and 17 times-over in serial maturities," said Eric Kazatsky, portfolio manager at Clark Capital Management. "When you have $62,105,000 in orders for $3,565,000 bonds in the 2033 maturity, it compounds the scarcity effect."
He added that in terms of absolute yields, the pricing on the competitive Southampton, New York, (Aaa/NR/NR) sale "should tell you all you need to know" about the muni market and its current state.
The Series 2019A public improvement bond sale totaled $15.217 million and was won by Citigroup with a net interest cost of $2.3126%. The deal was priced to yield from 1.24% in 2020 to 2.75% in 2039.
Meanwhile, the Los Angeles Unified School District's (Aa2/NR/AAA) competitive $594.61 million deal from Tuesday was trading up this week. The 10-year, with a 5% coupon, traded on Wednesday in blocks at 1.88% (+11 to MMD's triple-A) after originally priced at 1.90% (+12 MMD). The 5s of 2032 were originally sold at 2.15% and traded in blocks Thursday at 2.13%.
Thursday’s bond sales
Secondary market
Munis were stronger on the
On Refinitiv Municipal Market Data’s AAA benchmark scale, the yield on the 10-year muni GO fell two basis points and the 30-year muni yield fell by one basis point.
Treasuries were stronger as stock prices moved lower
The 10-year muni-to-Treasury ratio was calculated at 71.3% while the 30-year muni-to-Treasury ratio stood at 84.5%, according to MMD.
Previous session's activity
The MSRB reported 37,730 trades on Wednesday on volume of $12.52 billion. The 30-day average trade summary showed on a par amount basis of $12.40 million that customers bought $6.18 million, customers sold $4.05 million and interdealer trades totaled $2.18 million.
California, New York and Texas were most traded, with the Golden State taking 15.201% of the market, the Empire State taking 9.709% and the Lone Star State taking 8.592%.
The most actively traded security was the Puerto Rico Sales Tax Financing Corp.’s Restructured Series A-1 zeros of 2046, which traded 112 times on volume of $55.68 million.
Muni money market funds see inflows
Tax-exempt municipal money market fund assets increased $3.83 billion, with total net assets growing to $136.42 billion in the week ended May 6, according to the Money Fund Report, a publication of Informa Financial Intelligence.
The average seven-day simple yield for the 190 tax-free and municipal money-market funds fell to 1.59% from 1.72% the prior week.
Taxable money-fund assets rose $14.32 billion in the week ended May 7, bringing total net assets to $2.913 trillion. The average, seven-day simple yield for the 808 taxable reporting funds dipped down to 2.07% from 2.08% last week.
Overall, the combined total net assets of the 998 reporting money funds decreased $18.15 billion to $3.049 trillion in the week ended May 7.
Treasury to sell bills
The Treasury Department said Thursday it will auction $39 billion 91-day bills and $36 billion 182-day discount bills Monday. The 91s settle May 16, and are due Aug. 15, and the 182s settle May 16, and are due Nov. 13. Currently, there are $64.994 billion 91-days outstanding and no 182s.
Treasury auctions bills, bonds
The Treasury Department Thursday auctioned $50 billion of four-week bills at a 2.385% high yield, a price of 99.814500.
The coupon equivalent was 2.429%. The bid-to-cover ratio was 2.83. Tenders at the high rate were allotted 99.22%. The median rate was 2.360%. The low rate was 2.330%.
Treasury also auctioned $35 billion of eight-week bills at a 2.380% high yield, a price of 99.629778. The coupon equivalent was 2.429%. The bid-to-cover ratio was 3.05. Tenders at the high rate were allotted 14.97%. The median rate was 2.365%. The low rate was 2.330%.
Treasury also sold $19 billion of 30-year bonds with a 2 7/8% coupon at a 2.892% high yield, a price of 99.660573. The bid-to-cover ratio was 2.20. Tenders at the high yield were allotted 90.57%. The median yield was 2.840%. The low yield was 2.650%.
Gary E. Siegel contributed to this report
Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation.
