Municipal bond buyers saw the biggest day of the biggest week of the year as billions of new deals swarmed the market on Tuesday. Over $3.5 billion of paper hit the screens with $1.5 billion of competitive sales and $2 billion of negotiated deals going up for grabs.
Primary market
In the competitive arena, Washington state (Aaa/AA+/AA+) sold $754.43 million of general obligation bonds in three sales.
Goldman Sachs won the $490.405 million of Series 2020A various purpose GOs with a true interest cost of 2.8857%. JPMorgan Securities won the $224.445 million of Series 2020B motor vehicle fuel tax and vehicle-related fees GOs with a TIC of 2.8879%. And Robert W. Baird won the $39.575 million of Series 2020T taxable GOs with a TIC of 1.7337%.
The financial advisors are Montague DeRose & Associates and Piper Jaffray. The bond counsel is Foster Pepper.
Proceeds from the Series 2020A GOs and the 2020T taxable GOs will be used for various capital projects and programs; proceeds from the 2020B GOs will be used for transportation projects.
Mecklenburg County, N.C., (Aaa/AAA/AAA) sold $200 million of Series 2019 public improvement GOs. Morgan Stanley won the issue with a TIC of 2.1264%. Hilltop Securities and the Local Government Commission are the financial advisors. Robinson Bradshaw is the bond counsel.
Frederick County, Md., (Aaa/AAA/AAA) sold $118.32 million of Series 2019A public facilities GOs. Raymond James won the issue with a TIC of 2.1734%. The county also sold $39.595 million of Series 2019B taxable public facilities refunding GOs. Raymond James won the issue with a TIC of 2.2975%. Davenport & Co. is the financial advisor; Venable is the bond counsel. Proceeds will be used to fund the county’s capital improvement program.
In the short-term market, Greenville County School District, S.C., (Aa1/A1+/NR) sold $119.345 million of Series 2019C GO notes. Wells Fargo Securities won the issue with a bid of 4% and a premium of $2,181,510, an effective rate of 1.207474%. Compass Municipal Advisors is the financial advisor; Pope Flynn is the bond counsel.
In the negotiated sector, Citigroup priced the Los Angeles Department of Water and Power’s (NR/AA/AA) $325 million of Series 2019C power system revenue bonds for retail investors ahead of the institutional pricing on Wednesday. The deal was priced for retail with a short yield of 0.99% with a 5% coupon in 2025 and a long yield of 2.73% with a 3% coupon in 2049.
Since 2009, the DWP has sold about $15 billion of bonds with the most issuance occurring in 2010 when it offered $2.1 billion. It issued the least amount of bonds in in 2015 when it issued $789 million.
Ramirez & Co. priced and repriced Austin, Texas’ (Aaa/AAA/AAA) $175.365 million of Series 2019 public improvement and refunding bonds, certificates of obligation, and public property finance contractual obligations.
Hutchinson, Shockey, Erley & Co. priced the Mansfield Independent School District of Tarrant and Johnson Counties, Texas’ (PSF: Aaa/NR/AAA) $156.23 million of Series 2019A unlimited tax school building bonds.
Morgan Stanley priced the Dormitory Authority of the State of New York’s (Aa1/AA/NR) $122 million of Series 2019D green revenue bonds for Cornell University.
Goldman Sachs priced the Rector and Visitors of the University of Virginia’s (Aaa/AAA/AAA) $150 million of Series 2019B general revenue pledge bonds while JPMorgan Securities priced the University’s $287.41 million of Series 2019C taxable general revenue pledge bonds.
Wells Fargo Securities priced Anchorage, Alaska’s (NR/AAA/AA+) $101.95 million of Series 2019A general purpose GOs, Series 2019B general purpose refunding GOs, Series 2019C school GOs and Series 2019D refunding school GOs.
Citigroup priced the New York City Housing Development Corp.’s (Aa2-VMIG1/A1+/NR) $113.175 million of Series 2019H term-rate multi-family housing revenue bonds.
Tuesday’s bond sales
Secondary market
Munis were weaker on the
On Refinitiv Municipal Market Data’s AAA benchmark scale, the yield on the 10-year muni GO rose by four basis points to 1.36% while the 30-year muni rose four basis points to 1.97%.
“The ICE muni yield curve is up two to four basis points as the week’s new issue calendar starts to price and Treasury yields rise,” ICE Data Services said in a Tuesday market comment. “Tobacco yields rise one to two basis points and high yield rises one basis point. Taxable yields are up two to three basis points.”
The 10-year muni-to-Treasury ratio was calculated at 79.5% while the 30-year muni-to-Treasury ratio stood at 90.0%, according to MMD.
"Dealers and underwriters are not trying to defend the market/prices [right now]," said one Texas trader. "Negotiated loans are chasing customer interest, which is driving another leg down in prices after the spot index’s cut yesterday were less than real clearing spreads. The market is beginning to reset."
Treasuries were weaker as stock prices traded lower. The Treasury three-month was yielding 1.951%, the two-year was yielding 1.658%, the five-year was yielding 1.557%, the 10-year was yielding 1.697% and the 30-year was yielding 2.180%.
Previous session's activity
The MSRB reported 29,304 trades Monday on volume of $7.67 billion. The 30-day average trade summary showed on a par amount basis of $11.14 million that customers bought $5.95 million, customers sold $3.22 million and interdealer trades totaled $1.98 million.
California, Texas and New York were most traded, with the Golden State taking 15.269% of the market, the Empire State taking 12.973% and the Lone Star State taking 11.794%.
The most actively traded security was the New York Metropolitan Transportation Authority 2019 BAN 5s of 2022, which traded eight times on volume of $37 million.
Treasury to sell $50B 4-week bills
The Treasury Department said it will sell $50 billion of four-week discount bills Thursday. There are currently $39.997 billion of four-week bills outstanding.
Treasury also said it will sell $40 billion of eight-week bills Thursday.
Treasury auctions $28B bills, $38B notes
The Treasury Department auctioned $28 billion of 364-day bills at a 1.740% high yield, a price of 98.240667. The coupon equivalent was 1.793%. The bid-to-cover ratio was 2.81.
Tenders at the high rate were allotted 70.53%. The median yield was 1.710%. The low yield was 1.680%.
Treasury also auctioned $38 billion of three-year notes with a 1 1/2% coupon at a 1.573% high yield, a price of 99.787062. The bid-to-cover ratio was 2.42.
Tenders at the high yield were allotted 74.98%. All competitive tenders at lower yields were accepted in full. The median yield was 1.540%. The low yield was 0.880%.
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.
