Municipal Buyers Welcome NYC TFA, California Bond Deals
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
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. ◽