Municipals improve with Treasuries as offerings price; New York Transitional sells $1 billion

By Sheri Kasprzak

New York, Sept. 22 – Municipals rounded out a busy session on a higher note with yields on top-rated munis falling by as much as 5 basis points, underperforming a stronger Treasuries market, traders said.

Treasuries got a boost on the day as global stocks sank. The 30-year Treasury bond yield fell by 8 bps to 2.94%, and the 10-year benchmark note yield fell by 6 bps to 2.14%. The five-year note yield fell by 7 bps to 1.44%, and the two-year yield fell by 3 bps to 0.69%.

Primary action was heavy during the day with the week’s largest offerings pricing.

NYC Transitional sells debt

Heading up the action, the New York City Transitional Finance Authority brought $1 billion of series 2016A future tax secured subordinate bonds.

The offering included $750 million of series 2016A-1 tax-exempt bonds, $190 million of series 2016A-2 taxable bonds and $60 million of series 2016A-3 taxable bonds.

The 2016A-1 bonds are due 2017 to 2039 with 3% to 5% coupons. The 2016A-2 bonds are due 2017 to 2025 with 1.04% to 3.16% coupons and all priced at par. The 2016A-3 bonds are due 2026 to 2027. The 2026 bonds have a 3.45% coupon and priced at 100.829 to yield 3.35%, and the 2027 bonds have a 3.5% coupon and priced at par.

The bonds were sold through senior manager Goldman Sachs & Co.

Proceeds will be used to finance capital expenditures.

Massachusetts prices RANs

In other new-issue activity, the Commonwealth of Massachusetts hit the market with $825 million of series 2015 general obligation revenue anticipation notes. The offering was downsized from $1.2 billion.

The deal included $200 million of series 2015A notes, $400 million of series 2015B notes and $225 million of series 2015C notes.

The 2015A notes are due April 27, 2016, have a 2% coupon and priced at 101.08 to yield 0.125%. The 2015B notes are due May 25, 2016, have a 2% coupon and priced at 101.224 to yield 0.13%. The 2015C notes are due June 22, 2016, have a 2% coupon and priced at 101.333 to yield 0.17%.

The notes (MIG 1/SP-1+/F1+) were sold competitively. The 2015A notes were sold at a 0.118351% net interest cost, the 2015B notes at a 0.150748% NIC and the 2015C notes at a 0.173948% NIC for a combined NIC of 0.149847%, said the state treasurer’s office.

J.P. Morgan Securities LLC, BofA Merrill Lynch and Morgan Stanley & Co. LLC all took pieces of the offering.

Proceeds will be used to finance capital expenditures.

Wayne airport deal sells

Among the other significant deals in the market Tuesday, the Wayne County Airport Authority priced $521.73 million of series 2015 airport revenue bonds. The offering was cut from $587.78 million.

The deal included $214,335,000 of series 2015D non-AMT bonds, $7.76 million of series 2015E AMT bonds, $224,625,000 of series 2015F AMT refunding bonds and $75.01 million of series 2015G non-AMT refunding bonds.

The 2015D bonds are due 2018 to 2035 with term bonds due in 2040 and 2045. The serial coupons range from 3% to 5%. The 2040 bonds have a 5% coupon that priced at 108.255 and a 5% coupon that priced at 109.477. The 2045 bonds have a 5% coupon that priced at 107.651 and a 5% coupon that priced at 108.864.

The 2015E bonds are due Dec. 1, 2038, have a 5% coupon and priced 105.693.

The 2015F bonds are due 2025 to 2034 with 5% coupons.

The 2015G bonds are due 2017 to 2036 with 2% to 5% coupons.

The bonds (A2/A/A-) were sold through senior managers Citigroup Global Markets Inc. and J.P. Morgan Securities LLC.

Proceeds will be used to finance the authority’s four-year capital improvement program for the airport and to refund the authority’s series 2001A hotel bonds.

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