Bal­ti­more, Guil­ford, N.C., Priced Muni Deals as FOMC Met

The Bond Buyer - - Market News - Aaron Weitz­man

Bal­ti­more and Guil­ford, N.C., were among a hand­ful of is­suers to price mu­nic­i­pal bonds Wed­nes­day as the mar­ket waited for the Fed­eral Open Mar­ket Com­mit­tee to an­nounce it had kept its bench­mark in­ter­est rate un­changed.

“I guess you could say there was slightly more new is­suance to­day in com­par­i­son to other Fed meet­ing days,” said one New York trader. The sell­ers may have moved ahead “be­cause it was a fore­gone con­clu­sion that no moves would be taken to­day,” the trader said. “But I also think that small and less fre­quent/not so well known is­suers could come in while not hav­ing to deal with be­ing over­shad­owed by larger deals and big­ger names.”

Bank of Amer­ica Mer­rill Lynch priced the Mayor and City Coun­cil of Bal­ti­more, Md.’s $226.955 mil­lion of gen­eral obli­ga­tion con­sol­i­dated pub­lic im­prove­ment and re­fund­ing and tax­able bonds.

The $76.175 mil­lion of tax ex­empt se­ries 2017A bonds were priced to yield from 1.06% with a 4% coupon in 2018 to 2.82% with a 5% coupon in 2037.

The $ 108.49 mil­lion of tax- ex­empt se­ries 2017B bonds were priced to yield from 1.17% with a 5% coupon in 2019 to 2.57% with a 5% coupon in 2031.

The $33.675 mil­lion of tax­able se­ries 2017C bonds were priced at par to yield from 1.734% in 2018 to 3.659% in

2037. The 2018 ma­tu­rity was priced about 30 ba­sis points above the com­pa­ra­ble Trea­sury and the 2037 ma­tu­rity was priced about 130 ba­sis points above the com­pa­ra­ble Trea­sury.

The $8.61 mil­lion of tax­able se­ries 2017D bonds were priced at par to yield from 1.734% in 2018 to 1.958% in 2019. The 2018 ma­tu­rity was priced about 30 ba­sis points above the com­pa­ra­ble Trea­sury and the 2019 ma­tu­rity was priced about 35 ba­sis points above the com­pa­ra­ble Trea­sury.

The deal is rated Aa2 by Moody’s In­vestors Ser­vice and AA by S&P Global Rat­ings.

Wells Fargo priced and repriced the County of Guil­ford, N.C.’s $179.785 mil­lion of GO re­fund­ing bonds. The bonds were repriced to yield from 0.97% with a 4% coupon in 2018 to 2.64% with a 3% coupon in 2030. It car­ries top triple-A from Moody’s, S&P and Fitch Rat­ings.

JPMor­gan priced the School Board of Hills­bor­ough County, Fla.’s $113.99 mil­lion re­fund­ing cer­tifi­cates of par­tic­i­pa­tion for the Mas­ter Lease Pro­gram. The $98.46 mil­lion of se­ries 2017C bonds were priced to yield from 1.21% with a 5% coupon in 2019 to 1.77% with a 5% coupon in 2023.

The $15.53 mil­lion of tax­able re­fund­ing COPs were priced at par to yield from 1.80% in 2018 to 1.98% in 2019. The deal is rated Aa2 by Moody’s, AA-mi­nus by S&P and AA by Fitch.

In the com­pet­i­tive arena, Mas­sachusetts sold $142.64 mil­lion of fed­eral high­way grant an­tic­i­pa­tion notes for the Ac­cel­er­ated Bridge Pro­gram. Wells Fargo won the bid­ding with a true in­ter­est cost 2.15%. The GANs were priced to yield from 1.17% with a 5% coupon in 2021 to 1.98% with a 5% coupon in 2027.

The FOMC de­ci­sion came as no sur­prise. The com­mit­tee voted unan­i­mously to keep the fed funds rate in the 1.0% to 1.25% range. Most mar­ket par­tic­i­pants now ex­pect an in­crease the next time the FOMC meets on Dec. 13.

Pres­i­dent Trump is ex­pected to make his nom­i­na­tion for Fed­eral Re­serve chair Thurs­day, in a move that may have wider con­se­quences. That choice “could have broad im­pli­ca­tions for do­mes­tic mon­e­tary pol­icy,” said Bill Merz, di­rec­tor of fixed in­come at U.S. Bank Wealth Man­age­ment. “Jerome Pow­ell is viewed as the strong fa­vorite and would be seen as a sta­tus quo nom­i­na­tion given his past board ex­pe­ri­ence and close pol­icy align­ment with cur­rent Chair Janet Yellen.”

Top-shelf mu­nic­i­pal bonds were mixed at the mar­ket close on Wed­nes­day. The yield on the 10-year bench­mark muni gen­eral obli­ga­tion was one ba­sis point higher to 2.02% from 2.01% on Tues­day, while the 30-year GO yield was one ba­sis point lower to 2.82% from 2.83%, ac­cord­ing to a fi­nal read of Mu­nic­i­pal Mar­ket Data`s triple-A scale.

U.S. Trea­suries were mixed at the mar­ket close on Wed­nes­day. The yield on the two-year Trea­sury nudged up to 1.62% from 1.59%, the 10-year Trea­sury yield was flat at 2.37% and yield on the 30-year Trea­sury bond was down to 2.86% from 2.87%. ◽

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