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