Bonds

Munis improve while billion-dollar-plus deals price

Municipals were firmer Wednesday while a busy primary market saw Pennsylvania sell $2.1 billion of general obligation bonds competitively and the New York City Transitional Finance Authority repriced its $1.3 billion of revenue bonds in the negotiated market with yields lowered by up to 12 basis points from Tuesday’s retail offering.

Treasuries were firmer five years and out, and equities ended down.

The two-year muni-to-Treasury ratio Tuesday was at 60%, the three-year at 60%, the five-year at 60%, the 10-year at 61% and the 30-year at 88%, according to Refinitiv Municipal Market Data’s 3 p.m., ET, read. ICE Data Services had the two-year at 60%, the three-year at 60%, the five-year at 59%, the 10-year at 62% and the 30-year at 86% at 4 p.m.

Municipal mutual fund losses continued last week as the Investment Company Institute Wednesday reported investors pulled only $475 million from the funds in the week ending Nov. 29 after $97 million of outflows the previous week.

Exchange-traded funds saw another week of inflows to the tune of $796 million after inflows of $786 million the week prior, according to ICI.

In the competitive market Wednesday, Pennsylvania (Aa3/A+/AA/) sold $753.615 million of GOs, First Refunding Series of 2023, Bid Group A, to BofA Securities, with 5s of 9/2024 at 3.05%, 5s of 2028 at 2.61% and 5s of 2033 at 2.67%, noncall.

The state also sold $672.500 million of GOs, First Series of 2023, Bid Group D, to BofA Securities, with 5s of 9/2024 at 3.05%, 5s of 2028 at 2.61% and 5s of 2033 at 2.67%, noncall.

Pennsylvania sold $331.250 million of GOs, First Series of 2023, Bid Group C, to Jefferies, with 5s of 9/2039 at 3.25% and 4s of 2043 at 3.95%, callable 9/1/2033.

Additionally, the state sold $331.250 million of GOs, First Series of 2023, Bid Group B, to Morgan Stanley, with 5s of 9/2034 at 2.67% and 5s of 2038 at 3.16%, callable 9/1/2033.

In the negotiated market, Jefferies priced and repriced for institutions $1.274 billion of tax-exempt future tax-secured subordinate bonds from the New York City Transitional Finance Authority (Aa1/AAA/AAA/), with yields lowered up to 12 basis points from Tuesday’s retail offering: The first tranche, $1.2 billion of Fiscal 2024 Series D, Subseries D-1, saw 5s of 11/2026 at 2.72% (-6), 5s of 2028 at 2.63% (-6), 5s of 2033 at 2.76% (-7), 5s of 2038 at 3.29% (-11) and 4s of 2042 at 3.93% (-7), callable 5/1/2034.

The second tranche, $74.240 million of Fiscal 2024 Series E, Subseries E-1, saw 5s of 2030 at 2.68% (-6), 5s of 2033 at 2.76% (-7), 5s of 2038 at 3.29% (-11) and 5s of 2040 at 3.47% (-12), callable 5/1/2034.

Loop Capital Markets priced for the Stockton Unified School District, California, (Aa3/AA//) $142.390 million of GOs. The first tranche, $20.350 million of 2014 Election Ed-Tech bonds, Series 2023C, saw 5s of 8/2025 at 2.97% and 5s of 2028 at 2.66%, noncall.

The second tranche, $28.380 million of 2018 Election GO Reauthorization bonds, Series 2023C, saw 5s of 8/2025 at 2.97%, 5s of 2028 at 2.66%, 5s of 2033 at 2.74% and 5s of 2036 at 3.01%, callable 8/1/2033.

The third tranche, $20.735 million of refunding bonds, Series 2023A, saw 5s of 7/2024 at 3.06%, 5s of 7/2028 at 2.66% and 5s of 1/2029 at 2.67%, noncall.

The fourth tranche, $72.925 million refunding bonds, Series 2023B, saw 5s of 8/2024 at 3.06%, 5s of 2028 at 2.66%, 5s of 2033 at 2.74%, 5s of 2038 at 3.26% and 5s of 2040 at 3.41%, callable 8/1/2033.

Secondary trading
California 5s of 2024 at 3.13%-3.11% versus 3.23%-3.22% on 11/16. Ohio 5s of 2024 at 2.97% versus 3.01%-2.96% Tuesday. Massachusetts 5s of 2025 at 2.80%-2.76%.

Wisconsin 5s of 2027 at 2.56%-2.57% versus 2.62%-2.61% Tuesday and 2.64% Thursday. Maryland 5s of 2028 at 2.55%-2.53%. San Diego USD 5s of 2029 at 2.33%-2.31%.

NYC 5s of 2031 at 2.65%. Chandler, Arizona, 5s of 2032 at 2.56%-2.55%. California 5s of 2033 at 2.53%.

Triborough Bridge and Tunnel Authority 5s of 2048 at 3.91%. Indiana Finance Authority 5s of 2053 at 4.18% versus 4.33% on 11/29 and 4.43% on 11/27. Massachusetts 5s of 2053 at 4.04%-4.03% versus 4.03%-4.06% Tuesday and 4.03% Monday.

AAA scales
Refinitiv MMD’s scale was bumped two to five basis points: The one-year was at 2.94% (-2) and 2.74% (-5) in two years. The five-year was at 2.49% (-4), the 10-year at 2.53% (-4) and the 30-year at 3.71% (-2) at 3 p.m.

The ICE AAA yield curve was bumped four to five basis points: 2.91% (-4) in 2024 and 2.74% (-5) in 2025. The five-year was at 2.48% (-5), the 10-year was at 2.57% (-5) and the 30-year was at 3.69% (-4) at 4 p.m.

The S&P Global Market Intelligence municipal curve was bumped up to five basis points: The one-year was at 2.90% (unch) in 2024 and 2.77% (unch) in 2025. The five-year was at 2.56% (-5), the 10-year was at 2.65% (-3) and the 30-year yield was at 3.67% (-2), according to a 3 p.m. read.

Bloomberg BVAL was bumped three to five basis points: 2.80% (-4) in 2024 and 2.72% (-5) in 2025. The five-year at 2.46% (-5), the 10-year at 2.55% (-4) and the 30-year at 3.62% (-3) at 3 p.m.

Treasuries were firmer five years and out.

The two-year UST was yielding 4.604% (+3), the three-year was at 4.337% (+1), the five-year at 4.118% (-2), the 10-year at 4.124% (-5), the 20-year at 4.476% (-8) and the 30-year Treasury was yielding 4.231% (-8) at near the close.

$2B JFK Terminal One deal finds yield-seekers
The largest deal last week was a $2 billion BBB- transaction financing John F. Kennedy’s new Terminal One, which fared well with investors seeking higher yields amid a rallying market.

In the primary market last week, Citigroup Global Markets priced and repriced to lower yields for the New York Transportation Development Corp. (Baa3//BBB-/BBB-/) an upsized $2 billion from $1.5 billion of green AMT John F. Kennedy International Airport New Terminal One Project special facilities revenue bonds, Series 2023, with yields lowered up to 25 basis points from the preliminary pricing: 5.5s of 6/2038 at 4.74% (-20), 5.5s of 2043 at 4.65% (-25), 5s of 2049 at 5.05%, 6s of 2054 at 5.41% (-20), 5.125s of 2060 at 5.21% and 5.375s of 2060 at 5.56%, callable 6/30/2031.

“Investors flocked to this borderline [investment grade/high yield] deal, preferring to spend their cash on higher quality and less speculative names,” Birch Creek Capital strategists said in a weekly report.

After receiving around 10 times subscriptions, they said “the deal was upsized to $2 billion and re-priced 15 basis points tighter, while on the break, some maturities traded as much as 40 basis points better.”

“Our successful refinancing reflects a strong endorsement of our project by the capital markets, as The New Terminal One progresses on schedule and within budget,” said The New Terminal One President and CEO Gerrard P. Bushell, in a statement. “The transaction is in line with our continued efforts to de-risk the project and maintain our position of financial strength.”

The proceeds from the bonds will be used to refinance a portion of the bank facility raised in June 2022 to fund the costs of The New Terminal One’s Phase A, a $9 billion project that is the nation’s largest public-private partnership, according to a press release.

Of the $2 billion issue, $800 million was insured by Assured Guaranty Municipal Corp.

“Assured Guaranty’s bond insurance on $800 million of bonds helped to optimize the cost for this important oversubscribed $2 billion financing and we are thrilled to have played such a significant role in what has resulted in a remarkable execution by Citi on behalf of New Terminal One for such a high-profile transaction,” said Lorne Potash, managing director of infrastructure finance at Assured, in a statement.

“This project is the largest U.S. P3  transportation project to date and is one of the largest insured bond transactions Assured Guaranty has participated in during the post-global financial crisis era. It was great to work with all involved,” noted Sam Nakhleh, director of infrastructure finance for Assured, in a statement.

Primary still to come
The Los Angeles Department of Water and Power (Aa2/AA-//AA/) is set to price Thursday $380.835 million of power system revenue refunding bonds, 2023 Series E, serials 2025, 2029-2045, term 2053. RBC Capital Markets.

The Indianapolis Local Public Improvement Bond Bank (A1//A/) is set to price Thursday $215.765 million of Indianapolis Airport Authority Project bonds, consisting of $70.025 million of non-AMT bonds, Series 2023I-1, serials 2026-2043, terms 2048, 2053, and $145.740 million of AMT bonds, Series 2023I-2, serials 2025-2043, terms 2048, 2053. Ramirez & Co.

The Housing Authority of Dekalb County, Georgia, (/A+//) is set to price Thursday $100.985 million of Kensington Station Project affordable multifamily housing senior revenue bonds, Series 2023A. KeyBanc Capital Markets.

Competitive
The Minnesota Public Facilities Authority is set to sell $323 million of State Revolving Fund revenue bonds, Series 2023A, at 11:30 a.m. Thursday and $98.680 million of State Revolving Fund revenue refunding bonds, Series 2023B, at 11:45 a.m. Thursday.

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