Municipals rally as another large deal slate prices; Dasny offers $1.52 billion revenue bonds

By Sheri Kasprzak

New York, July 22 – Municipals were stronger on the day Wednesday as the week’s heavy primary calendar continued to see solid demand, traders reported.

Yields on top-rated munis were lower by as much as 4 basis points, said a trader in the late afternoon. After underperforming Treasuries Tuesday, munis were pretty much in line with Treasuries’ performance on Wednesday. During the day, the 30-year Treasury bond yield fell by 4 bps and the 10-year by 2 bps.

Demand for the week’s $9 billion new-issue slate has so far been strong. For example, Port of Seattle’s $585.88 million revenue bond offering priced Tuesday saw yields adjusted by as much as 10 basis points lower than initial pricing, a trader said.

Dasny upsized deal

Heading up the day’s primary action, the Dormitory Authority of the State of New York sold $1,522,050,000 of series 2015A state sales tax revenue bonds. The offering was upsized from $1,167,875,000.

The bonds (/AAA/AA+) were sold through Morgan Stanley & Co. LC, RBC Capital Markets LLC and Siebert Brandford Shank & Co. LLC.

The bonds are due 2016 to 2027 with 2% to 5% coupons.

The bonds were priced during the retail order period with the 10-year maturity bifurcated into 2.375% and 5% coupons and initially priced to yield 2.41%, said a trader before the deal priced.

Proceeds will be used to refund outstanding state-supported debt.

Honolulu offers bonds

Another large offering came from the City and County of Honolulu, which hit the market Wednesday with $688,035,000 of series 2015 wastewater system revenue bonds. That deal was downsized slightly from $689.12 million.

The offering included $178,035,000 of series 2015A first bond resolution senior bonds (Aa2//AA), $272,655,000 of series 2015B refunding first resolution bonds (Aa2//AA), $98.15 million of series 2015C taxable refunding bonds (Aa2//AA), $116,805,000 of series 2015A second resolution bonds (Aa3//AA-) and $22.39 million of series 2015B taxable refunding second resolution bonds (Aa3//AA-).

The series 2015A first resolution bonds are due 2017 to 2035 with term bonds due in 2040 and 2045. The serial coupons range from 2% to 5%. The 2040 bonds have a 5% coupon priced at 112.976 and the 2045 bonds have a 5% coupon priced at 112.263.

The 2015B first resolution bonds are due 2016 to 2036 with 3% to 5% coupons.

The 2015C taxable first resolution bonds are due 2016 to 2030 with term bonds due in 2035 and 2040. The serial coupons range from 0.601% to 4.118% all priced at par. The 2035 bonds have a 4.411% coupon and the 2040 bonds have a 4.561% coupon both priced at par.

The 2015A second resolution bonds are due 2017 to 2032 with 3% to 5% coupons.

The 2015B second resolution bonds are due 2016 to 2032 with 0.851% to 4.568% coupons all priced at par.

The bonds were offered through BofA Merrill Lynch and Piper Jaffray & Co.

Proceeds will be used to finance additions and improvements to the wastewater system, as well as to refund existing debt.

Tampa airport deal prices

Elsewhere, the Hillsborough County Aviation Authority of Florida priced $322.18 million of series 2015 revenue bonds for the Tampa International Airport.

The deal included $148,435,000 of series 2015A senior AMT bonds (Aa3/AA-/A+), $19.62 million of series 2015A subordinate AMT bonds and $154,125,000 of series 2015B subordinate non-AMT bonds.

The 2015A senior bonds are due 2027 to 2035 with term bonds due in 2040 and 2044. The serial bonds have 5% coupons. The 2040 bonds have a 5% coupon priced at 108.219 and the 2044 bonds have a 5% coupon priced at 107.662.

The 2015A subordinate bonds are due 2031 to 2035 with term bonds due in 2040 and 2044. The serial bonds have 5% coupons. The 2040 bonds have a 5% coupon priced at 107.108 and the 2044 bonds have a 5% coupon priced at 106.558.

The 2015B subordinate bonds are due 2031 to 2035 with term bonds due in 2040 and 2044. The serial bonds have 5% coupons. The 2040 bonds have a 5% coupon priced at 109.425 and the 2044 bonds have a 5% coupon priced at 108.86.

Proceeds will be used to make improvements to relieve congestion on roadways at the airport’s main terminal.

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