New York City offered its Transitional Finance Authority bonds to retail investors for a second day as a new bid laden with big problems from Texas and South Carolina made its way to market.
In secondary trading, municipalities were overwhelmingly stronger on Tuesday, with yields on AAA scales falling as much as two basis points on longer maturities while increasing on the short end of the curve.
The municipal market was stable or slightly better in 30 years by a basis point or two, a New York underwriter said Tuesday.
“The bid lists are a bit longer, but the market is performing well – despite the big schedule,” he said, noting that the Central Texas Regional Mobility Authority and South Carolina Public Service Authority agreements have was well received amid the general firmness. .
“Assuming nothing drastic happens in the next four days, the broader market will end up falling by around 40 basis points for the month, but still hold a gain of nearly 3% for the year,” according to Kim Olsan, senior vice president of Financial FHN. “High yield is up a nominal amount this month and just above the positive level since the start of the year.”
Taxes, while exploding in terms of the total volume as a percentage of new issuance, took a hit this month, she said.
“The big story has been in taxable munis, down more than 1% in October on a volume that could exceed $ 25 billion for the month (there was $ 43 billion in the first 10 months of the last year), ”Olsan said. “The sector is still up by more than 7% in 2020, but will need a significant turnaround at the end of the year to exceed the gain of 11% in 2019.”
Peter Block, general manager of credit strategy at Ramirez & Co., said this week’s schedule was another “blockbuster” driven by big deals like the upcoming Los Angeles Community College District and Los Angeles offerings. Angeles Unified School District of $ 1.1 billion.
Beyond this week, Block said the 30-day viewable supply is estimated to be less than $ 4.1 billion – or $ 24.5 billion in deadlines and calls, and $ 20.4 billion dollars of advertised offer.
“High school remains up for auction as a sought-after bid and trading remains at average levels,” Block wrote in a weekly city commentary. “The inventory of dealers remains light before the elections. Tax exemptions remain fairly valued on a ratio and spread basis, while taxes remain cheap compared to comparable taxable companies, ”he continued.
Ramirez & Co. held a second day of retail orders on the New York City Transitional Finance Authority Fiscal Year 2021 Series D Sub-Series D-1 (Aa1 / AAA / AAA / NAF ). obligations. Yields were unchanged from Monday’s levels.
The bonds were retailed at a yield of 0.30% with a coupon of 5% (+12 basis points) in 2022 to 0.79% with a coupon of 5% (+35 basis points) in 2026 and a yield of 1.82% with a 5% coupon (+56 basis points) in 2034 at 2.80% with a coupon of 2.75% (+106 basis points) and 2.78% with a coupon of 3% (+104 basis points) at a split maturity 2050.
Bonds will be priced for institutions on Wednesday; TFA also plans to sell about $ 200 million in taxable fixed-rate bonds on Wednesday. And TFA will again offer $ 218.215 million of FY2001 Series C Bonds, FY10 G-5 Sub-Series Bonds, and S-6 Sub-Series Bonds. for fiscal year 2013.
“Based on the estimated estimate of New York City credits to be recovered after this year’s enlargement, a commitment to the new Transitional Finance Authority bond issue might look attractive,” he said. said Olsan of FHN. “Intermediate maturities have been offered for retail orders at spreads above + 50 / AAA and with absolute returns above 2% on long coupons below 5%.”
She said other sectors are also seeing rewards.
“Likewise, some pockets in the secondary sector have similar advantages. Offer lists are always skewed towards short-term and short-term structures – which appears to be both a seller-friendly approach and a buyer-friendly approach in short calls with almost no new issues with these formats, ”he said. Olsan said. “A 20-year-old state GO seller with a five-year call was paid 1% on a bid list, almost 50 basis points lower than the implied 20-year AAA spot, but with a large concession with a call date of 2025. “
Since 2020, the NYC TFA has sold roughly $ 57 billion in debt, with the highest number of issues occurring in 2018, when it offered $ 7.76 billion in debt.
The South Carolina Public Service Authority (A2 / A / A- / NR entered the market with $ 638.33 million in Santee Cooper bonds in two issues.
Barclays Capital has priced the South Carolina Public Service Authority 2020A Series $ 338.49 million for reimbursement and improvement of tax-exempt income obligations. The bond price was 0.37% with a coupon of 5% in 2021 to 2.38% with a coupon of 5% in 2043.
BofA Securities has priced PSA’s Series 2020B Taxable Redemption Income Bonds at $ 299.84 million. The bonds were valued at par for a yield of 1.485% in 2025 to 2.659% in 2032.
BofA evaluated the Central Texas Regional Mobility Authority $ 340.91 million Series 2020E Senior Income Bond (Baa1 / A- / NR / NR), Series 2020F Senior Income Bond Lookup Notes (Baa2 / BBB + / NR / NR) and Series 2020G subordinates (Baa2 / BBB + / NR / NR) lien income repayment obligations.
The series 2020E bond price was 1.48% with a coupon of 5% in 2029 to 2.42% with a coupon of 4% in 2040; a 2045 maturity was valued at 5s for a yield of 2.43% and a 2050 deadline was valued at 4s for a yield of 2.71%.
The price of Series 2020F bonds was 5 for a yield of 0.93% to maturity 2025. The price of Series 2020G bonds was 1.47% with a coupon of 5% in 2028 at 2, 62% with a coupon of 4% in 2040; a 2045 maturity was evaluated at 4 for a yield of 2.79% and a 2050 maturity was evaluated at 4 for a yield of 2.86%.
RBC Capital Markets has priced Austin, Texas (Aa3 / AA / AA / NR) for $ 227.795 million of Series 2020A Electric Utility System Revenue and Repayment Obligations.
The bond price was 5s for a yield of 0.28% in 2023 to 1.77% in 2040, 1.94% in 2045 and 2.02% in 2050.
Siebert Williams Shank priced the Cypress-Fairbanks Independent School District, Harris County, Texas (Aaa / AAA / NR / NR) at $ 388.23 million of Series 2020A Unlimited Tax School Building Bonds and refund. The agreement is supported by the guarantee program of the Permanent Schools Fund. The bond price was 0.21% with a coupon of 4% in 2022 to 2.46% with a coupon of 2.25% in 2045.
In the competitive arena, Hudson County, NJ, (NR / AA / NR / NR) sold unlimited tax general improvement bonds for $ 223.086 million. JPMorgan Securities won the bonds with an effective interest cost of 2.1661%. The price of the bonds was 0.25% with a coupon of 2% in 2021 to 2.20% with a coupon of 3% in 2041. NW Financial Group is the financial advisor; Wilentz Goldman is the bond lawyer.
Evergreen School District # 114, Washington (Aaa / NR / NR / NR) sold $ 223.845 million in unlimited GOS taxes backed by the Washington State School District Credit Enhancement Program. BofA won the bonds with an TIC of 2.2394%. The bond prices were 0.20% with a 5% coupon in 2021 to 1.84% with a 4% coupon in 2039. The financial advisor is Educational Services District 112 in Vancouver, Washington. Pacifica Law Group is the bond advisor.
Goldman Sachs is expected to price the Los Angeles Unified School District (Aa3 // AA + / AAA) on Wednesday at $ 1.1 billion in ad valorem property tax bonds dedicated to the Q Series 2020C measure.
BofA is expected to price $ 1.8 billion Los Angeles Community College District (Aaa / AA + //) taxable general bond redemption bonds on Thursday.
Some notable exchanges on Tuesday:
Delaware GOs, 5 of 2022, were trading at 0.19%. On Friday, they were trading at 0.20%. Texas Waters, 5s of 2023, was trading at 0.23% -0.22%. Maryland GOs, 5 of 2028, were trading at 0.73%. Baltimore County, Maryland, GOs, 5 of 2030, were trading at 0.98%. When they valued their price at the end of February, it stood at 1.01%, showing how well the high ratings have gotten through the pandemic. Katy Texas’ 4 ISDs in 2039 were trading at 1.62% -1.55%. Washington GOs, 5 of 2040, were trading at 1.61% -1.52%. The Leander Texas ISD 4s for 2041 traded at 1.71%.
High-quality municipalities were mixed on Tuesday, according to final readings of Refinitiv MMD’s AAA benchmark scale. Short yields in 2021 and 2022 rose two basis points to 0.19% and 0.20% respectively. The 10-year muni yield fell two basis points to 0.94% while the 30-year muni yield fell to 1.72%.
The 10-year muni-treasure ratio was calculated at 120.8% while the 30-year muni-treasure ratio was 109.6%, according to MMD
The ICE AAA municipal yield curve showed short maturities up by one basis point with the 2021 maturity at 0.20% and the 2022 at 0.21%. The 10-year maturity fell one basis point to 0.93% and the 30-year maturity fell two basis points to 1.73%.
The 10-year muni-to-treasure ratio was calculated at 120% while the 30-year muni-treasure ratio was 110%, according to the ICE.
IHS Markit’s AAA municipal analysis curve showed short returns of up to 0.16% and 0.17% in 2021 and 2022, respectively, with 10-year returns at 0.97% and 30. years at 1.73%.
BVAL AAA curve shows yield to maturity 2021 up one basis point to 0.15%, maturity 2022 up one basis point to 0.16% while 10-year has fallen by one basis point to 0.93% and the 30-year declined by one basis point to 1.73%.
Treasuries have been stronger as stock prices have traded mixed.
The three-month Treasury bill yielded 0.10%, the 10-year Treasury yielded 0.78% and the 30-year Treasury yielded 1.56%.
The Dow Jones was down 0.70%, the S&P 500 0.25% and the Nasdaq was up 0.45%.