Mu­nic­i­pal Buy­ers Welcome NYC TFA, Cal­i­for­nia Bond Deals

The Bond Buyer - - Market News - By Chip Bar­nett & aaron Weitz­man

Mu­nic­i­pal bond buy­ers grabbed big deals from New York City and Cal­i­for­nia on Thurs­day, which traders said were in de­mand and ag­gres­sively bid.

Loop Cap­i­tal Mar­kets priced and repriced the New York City Tran­si­tional Fi­nance Au­thor­ity’s $901.535 mil­lion of tax-ex­empt fu­ture tax se­cured sub­or­di­nate fixed-rate bonds for in­sti­tu­tions after hold­ing a two­day re­tail or­der pe­riod.

The bonds were sold via the TFA’s un­der­writ­ing syn­di­cate, led by book-run­ning lead man­ager Loop, with Bank of Amer­ica Mer­rill Lynch, Cit­i­group, Gold­man Sachs, Jef­feries, JPMor­gan Se­cu­ri­ties, Ramirez & Co., RBC Cap­i­tal Mar­kets and Siebert Cis­neros Shank & Co. serv­ing as co-se­nior man­agers. Ad­di­tion­ally, the TFA sold $500 mil­lion of tax­able bonds in two com­pet­i­tive sales. Pro­ceeds from the bond sales will be used to fund cap­i­tal projects in the city.

Jef­feries won the $313.57 mil­lion of Fis­cal 2019 Se­ries B, Sub­series B-3 with a true in­ter­est cost of 3.9548% while

Mor­gan Stan­ley won the $186.43 mil­lion of Fis­cal

2019 Se­ries B,

Sub­series B-2 bonds with a TIC of 3.5695%.

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.

The TFA said that re­tail or­ders for the tax-ex­empt bonds to­taled $481 mil­lion, of which about $410 mil­lion was us­able. For the in­sti­tu­tional pric­ing, the TFA said it re­ceived around $2.1 bil­lion of pri­or­ity or­ders, rep­re­sent­ing 4.3 times the bonds of­fered for sale to in­sti­tu­tional in­vestors.

“Given the strong mar­ket de­mand, yields were re­duced by 4 – 5 ba­sis points for the 4.00% coupon, 5.00% coupon and 5.25% coupon bonds ma­tur­ing in 2034 through 2039,” the TFA said in a state­ment. “Fi­nal stated yields ranged from 1.80% in 2020 to 3.22% in 2038 for a 5.00% coupon bond, 3.60% in 2039 for a 4.00% coupon bond and 3.705% in 2040 for a 3.625% coupon bond.”

In the com­pet­i­tive arena, Cal­i­for­nia sold over $989 mil­lion of gen­eral obli­ga­tion and GO re­fund­ing bonds in three sales.

Cit­i­group won the $516.035 mil­lion of Bid­ding Group C tax-ex­empt var­i­ous pur­pose GO re­fund­ing bonds. Gold­man Sachs won the $338.38 mil­lion of Bid­ding Group B tax-ex­empt var­i­ous pur­pose GOs with a TIC of 3.2481%. And Wells Fargo Se­cu­ri­ties won the $134.855 mil­lion of Bid­ding Group A tax­able var­i­ous pur­pose con­struc­tion GO and re­fund­ing bonds with a TIC of 3.2621%.

Mu­nic­i­pal bonds were mostly weaker on Thurs­day, ac­cord­ing to a late read of the MBIS bench­mark scale. Bench­mark muni yields rose as ,much as one ba­sis point in the two- to five-year, nine-year and 14- to 29-year ma­tu­ri­ties and fell less than a ba­sis point in the one-year, seven-year and 10- to 13-year ma­tu­ri­ties and re­mained un­changed in the six-year, eight-year, and 30-year ma­tu­ri­ties.

High-grade mu­nis were also mostly weaker, with yields cal­cu­lated on MBIS’ AAA scale ris­ing as much as one ba­sis point in the two- to four-year and 14- to 30-year ma­tu­ri­ties, fall­ing less than one ba­sis point in the one-year, six- to eight-year and 10to 13-year ma­tu­ri­ties and re­main­ing un­changed in the five-year ma­tu­rity.

Mu­nic­i­pals were mixed on Mu­nic­i­pal Mar­ket Data’s AAA bench­mark scale, which showed the yield on the 10-year muni gen­eral obli­ga­tion re­main­ing un­changed while the yield on 30-year muni ma­tu­rity in­creased as much as one ba­sis point.

Trea­sury bonds were mixed as stock prices traded mixed. ◽

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