Municipals, Treasuries tumble as Fed sees June rate hike possibility; LaGuardia bonds price

By Sheri Kasprzak

New York, May 18 – Municipals ended the session on a weaker note as Treasuries dropped on the Federal Open Market Committee’s April minutes, which indicated a possible June rate hike, traders said.

The 10-year triple-A bond yield climbed 6 basis points to close at 1.56%, and the 30-year yield rose by 7 bps to 2.65%.

In Treasuries, the 10-year benchmark note yield rose 9 bps to close at 1.87%, and the 30-year bond yield ended the session up 8 bps at 2.67%. The five-year note yield rose 12 bps to 1.41%, and the two-year yield rounded out the day up 8 bps at 0.90%.

New York Transportation prices

New York Transportation Development Corp. hit the market with $2,439,250,000 of series 2016 special facilities bonds for LaGuardia Airport. The offering was downsized from $2,503,960,000.

The bonds (Baa3//BBB) were sold through Citigroup Global Markets Inc., Wells Fargo Securities LLC and Barclays.

The deal included $2,289,250,000 of series 2016A tax-exempt AMT bonds and $150 million of series 2016B taxable bonds.

The 2016A bonds are due 2030 to 2037 with term bonds due in 2041, 2046, 2050 and 2051. The serial coupons range from 4% to 5%. The 2041 bonds have a 4% coupon that priced at 103.135 and a 5% coupon that priced at 112.577. The 2046 bonds have a 4% coupon that priced at 102.781 and a 5% coupon that priced at 112.198. The 2050 bonds have a 5.25% coupon and priced at 113.733, and the 2051 bonds have a 4% coupon and priced at 104.135.

The 2016B bonds are due 2024 to 2030 with 3.023% to 3.673% coupons and all priced at par.

Pricing on the 2050 bond was finalized at 5.25% to yield 3.30% to the eight-year call, 17 bps below the initial pricing, said a market insider familiar with the offering.

Proceeds will be used to finance a loan to LaGuardia Gateway Partners LLC to fund the construction, improvement and renovation of a new Terminal B at LaGuardia Airport.

MEAG sells debt

In other significant deals, the Municipal Electric Authority of Georgia priced $355.55 million of series 2016 power bonds, upsized from $350 million.

The deal included $277,005,000 of series 2016 Project One subordinate bonds and $78,545,000 of general resolution subordinate bonds.

The Project One bonds are due 2017 to 2030 with 2.25% to 5% coupons, and the general resolution bonds are due 2017 to 2030 with 4% to 5% coupons.

The bonds were sold through BofA Merrill Lynch.

Proceeds will be used to finance capital improvements to the authority’s power system and to refund existing bonds.

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