Chicago O’Hare, Detroit Deals Hit Mar­ket Amid Muni Rally

The Bond Buyer - - Market News - By Chris­tine AlBAno & AAron WeitzmAn

Mu­nic­i­pal bonds fin­ished stronger with Trea­surys on Tues­day as the big Chicago O’Hare air­port deal came to mar­ket and Detroit sold gen­eral obli­ga­tion bonds.

JPMor­gan Se­cu­ri­ties priced Chicago’s $1.189 bil­lion of gen­eral air­port se­nior lien rev­enue and re­fund­ing bonds on Tues­day for O’Hare In­ter­na­tional Air­port.

The is­sue was di­vided into $599.08 mil­lion of Se­ries 2018B tax-ex­empt se­nior lien gen­eral air­port rev­enue bonds not sub­ject to the al­ter­na­tive min­i­mum tax and Se­ries 2018A se­nior lien gen­eral air­port rev­enue and re­fund­ing bonds sub­ject to the AMT. There was also a Se­ries 2018C tax­able GARB se­ries.

The deal is rated A by S&P Global Rat­ings and Fitch Rat­ings and A-plus by Kroll Bond Rat­ing Agency ex­cept for the Se­ries 2018B $300 mil­lion 2053 ma­tu­rity which is in­sured by As­sured Guar­anty Mu­nic­i­pal and rated AA by S&P and the Se­ries 2018A $116.595 mil­lion 2043 ma­tu­rity which is in­sured by Build

Amer­ica Mu­tual and rated AA by


Frasca & As­so­ciates and

Swap Fi­nan­cial

Group are fi­nan­cial ad­vi­sors while Mayer

Brown and Neal

& Leroy are bond coun­sel.

Gold­man Sachs priced Detroit’s $135 mil­lion of Se­ries 2018 gen­eral obli­ga­tion un­lim­ited tax bonds. The deal is rated Ba3 by Moody’s and B-plus by S&P.

In Detroit’s first post-bank­ruptcy stand­alone GO sale that car­ried spec­u­la­tive grade rat­ings, the 10-year landed at a yield of 4.45% with a 5% coupon, 194 ba­sis points over the MMD triple-A bench­mark, and 111 ba­sis points over the BBB. The longer 20-year landed at 4.95% with 5% coupon, 190 ba­sis points over the AAA and 103 ba­sis points over the BBB. The spreads are based on bench­marks at mar­ket close Mon­day. JPMor­gan Se­cu­ri­ties priced the New York City Hous­ing Devel­op­ment Corp.’s $300.93 mil­lion of Se­ries 2018K multi-fam­ily (Sus­tain­able Neigh­bor­hood) hous­ing rev­enue bonds. The deal is rated Aa2 by Moody’s and AA-plus by S&P.

Bank of Amer­ica priced San An­to­nio’s $130.81 mil­lion of New Se­ries 2018A elec­tric and gas sys­tems rev­enue re­fund­ing bonds. The deal is rated Aa1 by Moody’s, AA by S&P and AA-plus by Fitch.

Hill­top Se­cu­ri­ties priced San An­to­nio’s $135.92 mil­lion of Se­ries 2018 elec­tric and gas sys­tems vari­able-rate ju­nior lien rev­enue re­fund­ing bonds. The deal is rated Aa2 by Moody’s, AA-mi­nus by S&P and AA-plus by Fitch.

Since 2008, the city has sold about $13 bil­lion of bonds, with the most is­suance oc­cur­ring in 2012 when it of­fered $2.1 bil­lion. It sold the least amount of bonds in 2011 when it is­sued $411 mil­lion.

Cit­i­group priced the Cal­i­for­nia Mu­nic­i­pal Fi­nance Au­thor­ity’s $186.67 mil­lion of Se­ries 2018A lease rev­enue bonds for the Or­ange County Civic Cen­ter in­fras­truc­ture im­prove­ment pro­gram’s Phase II.The deal is rated AA by S&P and AA-plus by Fitch.

Mu­nic­i­pal bonds were stronger, ac­cord­ing to a late read of the MBIS bench­mark scale. Bench­mark muni yields fell as much as four ba­sis points in the one- to 30-year ma­tu­ri­ties.

High-grade mu­nis were stronger, with yields cal­cu­lated on MBIS’ AAA scale de­creas­ing as much as four ba­sis points across the curve.

Mu­nic­i­pals were stronger on Mu­nic­i­pal Mar­ket Data’s AAA bench­mark scale, which showed the yield on both the 10year muni gen­eral obli­ga­tion and on the 30-year muni ma­tu­rity falling eight ba­sis points.

“The muni curve is three to five ba­sis points lower with the greater move­ment in the longer end,” ICE Data Ser­vices said in a late mar­ket com­ment. “High-yield is also fol­low­ing with 2019 to 2029 one ba­sis point lower and the longer end two ba­sis points lower. The tax­able side of the mar­ket is also fol­low­ing suit with yields one ba­sis point lower in the two-year in­creas­ing to 7.9 ba­sis points lower in the 30-year. The to­bacco mar­ket is two ba­sis points lower as well.”

Trea­sury bonds were stronger as stocks plunged.

The spread on the three-year and fiveyear Trea­sury bills in­verted by about 1½ ba­sis points Mon­day, the first time it was neg­a­tive in 11 years, and the two- to fiveyear yield curve fol­lowed. The two- to 10year spread, which is con­sid­ered the most im­por­tant curve, was at 10 ba­sis points, also the flat­test in more than a decade.

Late Tues­day, the Trea­sury 30-year was at 3.178%, the 10-year stood at 2.917%, the five-year was at 2.802%, the two-year was at 2.819% while the Trea­sury three­month bill stood at 2.420%. ◽

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