Municipals close busy session little changed; Bay Area Toll brings upsized $1.4 billion deal

By Sheri Kasprzak

New York, July 15 – Municipals rounded out the busy session mostly flat as investors focused on the steady stream of new issues, traders reported.

Secondary selling pressure was almost nonexistent as new issues hit the market in force, said a trader in the afternoon.

“New deals are being well-received, so that’s really where the focus is today,” the trader said.

“Treasuries aren’t giving us much direction at all, and trading is fairly light.”

Bay Area Toll bonds price

Leading the way for the primary calendar, the Bay Area Toll Authority upsized its $1,402,945,000 sale of San Francisco Bay Area toll bridge bonds from $1,381,915,000.

The deal included $247,765,000 of series 2014A term-rate bonds, $552,645,000 of series 2014B term-rate bonds, $402,535,000 of series 2014C term-rate bonds and $200 million of series 2014F-1 fixed-rate bonds.

The 2014A bonds are due April 1, 2047, have a 1% coupon and priced at par. The 2014B bonds are due April 1, 2047, have a 1.5% coupon and priced at par. The 2014C bonds are due April 1, 2047, have a 1.875% coupon and priced at par. The 2014F-1 bonds are due April 1, 2054, have a 5% coupon and priced at 107.939.

The bonds (Aa3/AA/AA-) were sold through senior managers BofA Merrill Lynch and J.P. Morgan Securities LLC.

Proceeds will be used to finance capital projects and to refund the authority’s series 2008F-1 bonds.

D.C. brings green bonds

Looking to other offerings, the District of Columbia Water and Sewer Authority hit the market with $350 million of series 2014A public utility senior lien revenue green bonds, another deal that was upsized, this time from $300 million.

The bonds (Aa2/AA+/AA) were sold through joint bookrunners Goldman Sachs & Co. and Barclays.

The bonds are due Oct. 1, 2114, have a 4.814% coupon and priced at par.

Proceeds will be used to finance capital improvements to the water and sewer system.

The authority also announced plans to price $100 million of variable-rate demand bonds during the week of July 21, bringing to $450 million the total amount of green bonds priced.

D.C. Water, according to a statement, has typically issued 30- to 35-year tax-exempt munis to fund its capital improvement projects.

“In the case of the Clean Rivers Project, D.C. Water is financing a portion of the construction costs with a century bond to better match the useful life of the tunnel systems – expected to perform for at least 100 years,” the statement said.

The strategy will match the lifespan of the authority’s assets, chief financial officer Mark Kim said in the statement.

“The responsibility of a chief financial officer is to secure the funding necessary to undertake the work of the enterprise,” Kim said.

“We also need to formulate a financing strategy that both matches the lifespan of our assets with their funding stream and that presents an equitable charge to our ratepayers. We developed this innovative approach to achieve all these goals.”

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