TUES­DAY’S YIELDS

The Bond Buyer - - Front Page - By Chip Bar­nett & aaron Weitz­man

Re­tail in­vestors lined up to get first crack at the New York City Tran­si­tional Fi­nance Au­thor­ity’s fu­ture tax se­cured subor­di­nate bonds as un­der­writ­ers opened a two-day or­der pe­riod.

Weekly bond vol­ume is es­ti­mated to to­tal $3.6 bil­lion, con­sist­ing of $1.6 bil­lion of ne­go­ti­ated deals and $2 bil­lion of com­pet­i­tive sales. The NYC TFA tops the slate with its is­sue of more than $1.4 bil­lion of fu­ture tax se­cured subor­di­nate fis­cal 2019 bonds.

On Tues­day, Loop Cap­i­tal Mar­kets opened the re­tail or­der pe­riod on the TFA’s $902.47 mil­lion of tax-ex­empt fixed-rate bonds ahead of the in­sti­tu­tional pric­ing on Thurs­day.

The deal was warmly re­ceived as buy­ers snapped up the bonds, prompt­ing the un­der­writer to cur­tail or­ders in the 2023, 2028 and 2029 ma­tu­ri­ties.

Ad­di­tion­ally, the TFA is set to sell $500 mil­lion of tax­able bonds in two com­pet­i­tive sales on

Thurs­day. The fi­nan­cial ad­vi­sors are Pub­lic

Re­sources Ad­vi­sory Group and

Aca­cia Fi­nan­cial

Group. Bond coun­sel are Nor­ton Rose and

Bryant Rab­bino.

The deals are rated Aa1 by

Moody’s In­vestors Ser­vice and AAA by S&P Global Rat­ings and Fitch Rat­ings.

Pro­ceeds will be used to fund cap­i­tal projects, with the ex­cep­tion of pro­ceeds from about $150 mil­lion of the tax-ex­empt fixed-rate bonds, which will be used to con­vert out­stand­ing float­ing-rates into fixed-rates.

On Wed­nes­day, Wells Fargo Se­cu­ri­ties is ex­pected to price the Univer­sity of Chicago’s $400 mil­lion of Se­ries 2018C tax­able fixed-rate bonds.

The cor­po­rate CUSIP deal is rated Aa2 by Moody’s, AA-mi­nus by S&P and AA­plus by Fitch. Mu­nic­i­pal bonds were mostly weaker, ac­cord­ing to a late read of the MBIS bench­mark scale. Bench­mark muni yields rose as much as two ba­sis points in the four- to 30-year ma­tu­ri­ties and fell 12 ba­sis points in the one-year ma­tu­rity, six ba­sis points in the two-year ma­tu­rity and two ba­sis points in the three-year ma­tu­rity.

High-grade mu­nis were mixed, with yields cal­cu­lated on MBIS’ AAA scale ris­ing as much as three ba­sis points in three- to eight-year, 10- to 17-year and 24- to 30-year ma­tu­ri­ties, fall­ing as much as a ba­sis point in the one- and two-year, nine-year and 19- to 22-year ma­tu­ri­ties and re­main­ing un­changed in the 18-year and 23-year ma­tu­ri­ties.

Mu­nic­i­pals were weaker on Mu­nic­i­pal Mar­ket Data’s AAA bench­mark scale, which showed the yield on the 10-year muni gen­eral obli­ga­tion ris­ing two ba­sis points while the yield on 30-year muni ma­tu­rity in­creased one ba­sis point.

Trea­sury bonds were weaker as stock prices traded slightly lower.

AC­TIVELY TRADED IS­SUES

Rev­enue bonds com­prised 56.54% of to­tal new is­suance in the week ended Aug. 31, up from 56.53% in the prior week, ac­cord­ing to Markit. Gen­eral obli­ga­tion bonds made up 38.13%, down from 38.15% while tax­able bonds ac­counted for 5.33%, up from 5.32%.

Some of the most ac­tively traded mu­nis by type were from Puerto Rico and Texas is­suers.

In the GO bond sec­tor, the Puerto Rico 8s of 2035 traded 39 times. In the rev­enue bond sec­tor, the Texas 4s of 2019 traded 238 times. And in the tax­able bond sec­tor, the Puerto Rico Sales Tax Fi­nanc­ing Corp. 6.35s of 2039 traded 18 times.

The top mu­nic­i­pal bond un­der­writ­ers of last week in­cluded Mor­gan Stan­ley, Bank of Amer­ica Mer­rill Lynch, Cit­i­group, Ray­mond James & As­so­ci­ates and Piper Jaf­fray, ac­cord­ing to Thom­son Reuters data.

In the week of Aug. 26 to Sept. 1, Mor­gan Stan­ley un­der­wrote $1.0 bil­lion, BAML $671.7 mil­lion, Citi $643.3 mil­lion, Ray­mond James $375.4 mil­lion and Piper Jaf­fray $352.4 mil­lion. ◽

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