Municipals rise as Treasuries get boost; NYC Transitional Finance offers $999.75 million deal

By Sheri Kasprzak

New York, Oct. 22 – Municipal yields fell by 1 basis point to 2 bps on the session Thursday after Treasuries got a boost from weaker German bonds, market insiders reported.

Yields on top-rated munis were lower on the day after the two-year Treasury note yield fell by 3 bps and the five-year yield fell by 1 bp. Other Treasuries remained stable for the day.

Meanwhile, the remainder of the week’s significant deals hit the market to strong demand with yields lowered on some bonds.

NYC Transitional bonds price

One of the week’s largest offerings saw yields cut on several longer maturities, market sources said. The New York City Transitional Finance Authority priced $999.75 million of series 2016 future tax secured subordinate bonds. The deal was slightly downsized from $1 billion.

The offering included $349.75 million of series 2016B-1 tax-exempt bonds, $198.62 million of series 2016B-2 taxable bonds, $51.38 million of series 2016B-3 taxable bonds, $362,025,000 of series 2016C tax-exempt bonds and $37,975,000 of series 2016D tax-exempt bonds.

The 2016B-1 bonds are due 2028 to 2039 with 3% to 5% coupons. The 2016B-2 bonds are due 2017 to 2025 with 1.05% to 3.15% coupons and all priced at par. The 2016B-3 bonds are due 2026 to 2027 with 3.45% coupons and yields from 3.3% to 3.45%.

The 2016C bonds are due 2017 to 2030 with 2% to 5% coupons.

The 2016D bonds are due 2016 to 2027 with 1.5% to 5% coupons.

Yields were cut 1 bp to 6 bps on longer maturities, said a market source familiar with the deal.

The bonds (Aa1/AAA/AAA) were sold through joint bookrunners J.P. Morgan Securities LLC, BofA Merrill Lynch, Barclays, Loop Capital Markets LLC, Morgan Stanley & Co. LLC, Goldman Sachs & Co. and Wells Fargo Securities LLC.

Proceeds will be used to finance capital projects and refund outstanding bonds.

N.J. Turnpike sells bonds

Among the other significant offerings priced Thursday, the New Jersey Turnpike Authority sold $750 million of series 2015E turnpike revenue bonds.

The bonds (A3/A+/A) were sold through Citigroup Global Markets Inc.

The bonds are due 2031 to 2034 with a term bond due in 2045, said a term sheet. The serial coupons range from 3.375% to 5% with yields from 3.19% to 3.50%. The 2045 bonds have a 4% coupon that priced at 99.824 to yield 4.01% and a 5% coupon that priced at 110.015 to yield 3.70%.

Proceeds will be used to finance capital improvement projects.

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