Hefty, diverse slate of credits price into weaker market

Bonds

Secondary trading showed a weaker tone Tuesday but the focus shifted to the primary as a large slate of new issues along the credit spectrum were priced, while U.S. Treasuries improved and equities closed the session mixed.

The primary was led by two large California issues, including the state’s competitive sale of tax-exempt and taxable general obligation bonds, a hefty University of Miami deal and a refunding and tender offer from the Harris County-Houston Sports Authority.

The larger slate has put pressure on dealers to get new issues done. Last week, the muni market “struggled under the weight of outsized new issuance,” said Anders S. Persson, Nuveen’s chief investment officer for global fixed income, and Daniel J. Close, Nuveen’s head of municipals.

Deals were priced “extremely cheaply” to spur investor interest, they said.

“However, supply eventually overwhelmed the Street and some deals were pulled,” Persson and Close said.

The Ohio Water Development Authority and the California Community Choice Financing Authority both pulled their deals last week, though the latter priced on Friday. The issuer priced another large deal Tuesday.

Somewhat improved ratios and higher yields have enticed buyers back in.

Short-end muni-UST ratios were too rich before the September Fed rate cut, implying munis had already priced in cuts that hadn’t happened yet, while USTs were anticipating cuts but were not going to move until a cut happened, noted Joshua Perry, a partner, portfolio manager and a municipal credit analyst on the fixed income team at Brown Advisory.

Now short-end ratios have “equilibrated,” he said.

The two-year ratio Tuesday was at 65%, the three-year at 64%, the five-year at 65%, the 10-year at 70% and the 30-year at 86%, according to Refinitiv Municipal Market Data’s 3 p.m. EST read. ICE Data Services had the two-year at 66%, the three-year at 65%, the five-year at 66%, the 10-year at 71% and the 30-year at 84% at 3:30 p.m.

In the primary market Tuesday, RBC Capital Markets priced for the California Community Choice Financing Authority (Aa1///) $1.153 billion of green clean energy project revenue bonds, Series 2024D, with 5s of 9/2026 at 3.19%, 5s of 3/2029 at 3.30%, 5s of 9/2029 at 3.30%, 5s of 9/2032 at 3.64% and 5s of 2/2055 with a mandatory tender date of 9/1/2032 at 3.83%, callable 6/1/2032.

Barclays priced for the Miami-Dade County Educational Facilities Authority (A2/A-//) $864.95 million of University of Miami issue bonds. The first tranche, $555.615 million of revenue and revenue refunding bonds, Series 2024A, saw 5s of 4/2025 at 3.39%, 5s of 2029 at 2.97%, 5s of 2034 at 3.41%, 5s of 2039 at 3.70%, 5s of 2044 at 4.04% and 5.25s of 2048 at 4.19%, callable 4/1/2035.

The second tranche, $309.335 million of revenue refunding bonds, Series 2024B, saw 5s of 4/2030 at 3.20%, 5s of 2034 at 3.54%, 5.25s of 2039 at 3.83%, 5.25s of 2044 at 4.17% and 5.25s of 2045 at 4.23%, callable 4/1/2035.

Wells Fargo priced for The Virginia Housing Development Authority (Aaa/AAA//) $455.48 million of commonwealth mortgage bonds.

The first tranche, $80 million of non-AMT bonds, Series D, saw all bonds price at par: 3.25s of 1/2026, 3.4s of 1/2029, 3.4s of 7/2029, 3.9s of 1/2034, 3.9s of 7/2034, 4.1s of 7/2039, 4.5s of 7/2045, 4.65s of 1/2050 and 4.7s of 7/2055, callable 7/1/2033.

The second tranche, $160 million of taxables, Series E, saw all bonds price at par: 4.543s of 1/2026, 4.782s of 1/2029, 4.812s of 7/2029, 5.177s of 1/2034, 5.227s of 7/2034, 5.507s of 7/2039, 5.823s of 7/2044, 5.903s of 7/2049 and 5.953s of 7/2055, callable 7/1/2033.

The third tranche, $215.48 million on non-AMT bonds, Series F, saw 3.625s of 7/2055 with a mandatory tender date of 4/1/2026 at par.

J.P. Morgan priced for Atlanta (Aa3/A+//) $390.725 million of water and wastewater subordinate lien sustainability revenue bonds, with 5s of 11/2029 at 2.89%, 5s of 2034 at 3.32%, 5s of 2039 at 3.60% and 4s of 2043 at 4.10%, callable 11/1/2034.

Wells Fargo priced for Harris County-Houston Sports Authority (A1/AA//) $376.415 million of Assured Guaranty-insured revenue refunding bonds. The first tranche, $242.955 million of senior lien bonds, Series 2024A, saw 5s of 11/2025 at 3.28%, 5s of 2029 at 3.18%, 5s of 2034 at 3.54%, 4s of 2039 at 4.05%, 4s of 2044 at 4.30% and 5s of 2047 at 4.34%, callable 11/15/2034.

The second tranche, $133.46 million of second lien bonds, Series 2024B, saw 5s of 11/2025 at 3.38%, 5s of 2029 at 3.28%, 5s of 2034 at 3.68%, 5s of 2039 at 3.95%, 5s of 2044 at 4.24% and 5s of 2046 at 4.32%, callable 11/15/2034

BofA Securities priced for the Pasco County School District, Florida, (Aa3//AA/) $215 million of sales tax revenue bonds, with 5s of 10/2025 at 3.01%, 5s of 2029 at 2.92%, 5s of 2034 at 3.38% and 5s of 2039 at 3.63%, callable 10/1/2034.

J.P. Morgan priced for the Indiana Housing and Community Development Authority (Aaa//AA+/) $199.165 million of single-family mortgage social revenue bonds.

The first tranche, $97.125 million of non-AMT Series D-1 bonds, saw 3.3s of 7/2027, 3.45s of 1/2029, 3.5s of 7/2029, 3.95s of 1/2034, 3.9s of 7/2034, 4.1s of 7/2039, 4.55s of 7/2044, 4.7s of 7/2049 and 4.75s of 7/2054, callable 1/1/2033.

The second tranche, $2.875 million AMT Series D-2 bonds, saw all bonds price at par: 3.8s of 7/2025 and 3.85s of 7/2027, noncall.

The third tranche, $99.165 million of taxable Series D-3 bonds, saw all bonds price at par — 4.445s of 1/2026, 4.558s of 1/2029, 4.608s of 7/2029, 5.228s of 1/2034, 5.278s of 7/2034, 5.518s of 7/2039, 5.874s of 7/2044 and 5.944s of 7/2049 — except for 6s of 7/2054 at 5.328%, callable 1/1/2033.

Stifel priced for the Brownsburg 1999 School Building Corp., Indiana, (/AA+//) $120.36 million of ad valorem property tax first mortgage bonds, Series 2024A, with 5s of 1/2026 at 3.21%, 5s of 1/2029 at 3.01%, 5s of 7/2029 at 3.02%, 5s of 1/2034 at 3.45%, 5s of 7/2034 at 3.47%, 5s of 7/2039 at 3.75% and 5s of 7/2044 at 4.09%, callable 7/15/2034.

In the competitive market, California (Aa2/AA-/AA/) sold $471.995 million of various purpose GO refunding bonds to J.P. Morgan, with 3.875s of 2025 at 3.40%, 5s of 2029 at 2.75%, and 5s of 2034 at 3.17%, noncall.

The state sold $324.965 million of taxable various purpose GOs to Wells Fargo, with 4.5s of 8/2029 at 4.34%, noncall.

California also sold $55.445 million of taxable various purpose GO refunding bonds to Wells Fargo, with 4.45s of 8/2025 at 4.44% and 5s of 2031 at 4.55%, noncall.

Pender County, North Carolina, (Aa2/AA//) sold $144 million of GO school bonds to BofA Securities, with 5s of 3/2026 at 2.86%, 5s of 2029 at 2.75%, 5s of 2034 at 3.23%, 3s of 2039 at 3.80%, 4s of 2044 at 4.09% and 4s of 2045 at 4.15%, callable 3/1/2034.

The Pinellas County School District, Florida, sold $100 million of tax anticipation notes to TD Securities, with 5s of 6/2025 at 3.25%, noncall.

Issuance is sizable this week, but supply will drop next week with almost no deals on tap due to the election, Perry said.

Additionally, market volatility, with its whipsawing yields, has led market participants to be more “skittish,” he said.

However, “outsized” reinvestment money will come available Nov. 1 and Dec. 1, Persson and Close said.

Redemption flows will fall 12% month-over-month in November, but there may be a “modest increase” in reinvestment demand at the start of the month as on Nov. 1 issuers will return $14.3 billion of principal, according to CreditSights.

Investors will also receive $7 billion of Nov. 1 interest payments, the firm noted.

“Most (probably all) of that money will be held on the sidelines until after the election,” the firm said.

AAA scales
Refinitiv MMD’s scale was cut two to five basis points: The one-year was at 2.85% (+2) and 2.69% (+4) in two years. The five-year was at 2.68% (+4), the 10-year at 3.01% (+4) and the 30-year at 3.87% (+5) at 3 p.m.

The ICE AAA yield curve was cut two to five basis points: 2.96% (+2) in 2025 and 2.72% (+2) in 2026. The five-year was at 2.70% (+5), the 10-year was at 3.01% (+4) and the 30-year was at 3.81% (+4) at 3:30 p.m.

The S&P Global Market Intelligence municipal curve was cut: The one-year was at 2.90% (+3) in 2025 and 2.73% (+5) in 2026. The five-year was at 2.71% (+5), the 10-year was at 3.01% (+6) and the 30-year yield was at 3.81% (+5) at 3 p.m.

Bloomberg BVAL was cut two to four basis points: 2.85% (+2) in 2025 and 2.67% (+3) in 2026. The five-year at 2.71% (+3), the 10-year at 3.02% (+4) and the 30-year at 3.83% (+4) at 3:30 p.m. 

Treasuries were little changed.

The two-year UST was yielding 4.126% (-2), the three-year was at 4.094% (-1), the five-year at 4.110% (-1), the 10-year at 4.279% (flat), the 20-year at 4.626% (flat) and the 30-year at 4.526% (flat) at the close.

Primary to come
Washington (Aaa/AA+/AA+/) is set to price Wednesday $1.55 billion of general obligation bonds consisting of $886.245 million of various purpose GO refunding bonds, Series R-25B, serials 2025-2039; and $664.155 million of motor vehicle fuel tax and vehicle-related fees GO refunding bonds, Series R-25C, serials 2025-2039, 2042. BofA Securities.

The Pennsylvania Higher Educational Facilities Authority (A3/A/A/) is set to price Wednesday $1.107 billion of Thomas Jefferson University fixed-rate revenue bonds, consisting of $655 million of tax-exempt Series 2024B-1 bonds, $285 million of tax-exempt Series 2024B-2 bonds and $168 million of taxable Series 2024C bonds. J.P. Morgan.

The New Orleans Aviation Board (A2//A/) is set to price Wednesday $597.4 million of general airport revenue bonds, consisting of $47.575 million of non-AMT refunding bonds, Series 2024A, serials 2026-2045; $455.435 million of AMT refunding bonds, Series 2024B, serials 2026-2045; $19.875 million of non-AMT bonds, Series 2024C01, term 2054l $69.395 million of AMT bonds, Series 2024C-2, serials 2029-2045, term 2049, 2051; and $5.12 million of taxables, Series 2024C-3, serials 2026-2029. BofA Securities.

Philadelphia (A1/A+/A+/) is set to price Wednesday $558.37 million of water and wastewater revenue bonds, Series 2024C. Siebert Williams Shank.

The Nebraska Investment Finance Authority (/AAA//) is set to price Wednesday $130.51 million of single-family housing revenue bonds, consisting of $96 million of social non-AMT Series G bonds and $35 million of taxable Series H bonds. J.P. Morgan.

The Atlanta Urban Redevelopment Agency (Aa1//AAA/) is set to price Wednesday $103.735 million of surface transportation and infrastructure projects revenue bonds, Series 2024B, serials 2025-2044. Ramirez.

Competitive
The City and County of San Francisco (Aa2/AA+/AA+/) is set to sell $118.705 million of multiple capital improvement projects certificates of participation, Series 2024A, at 11:30 a.m. Thursday.

The Charleston County School District is set to sell $115.065 million of GOs at 11 a.m. Thursday.

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