The Port Authority of New York and New Jersey drew a top yield of 6.825% yesterday on its offering of $103.6 million consolidated revenue bonds and the issue received a warm response from permanent investors.
Trading of tax-exempt paper in the secondary market, however, continued to play second fiddle to the primary sector, and market participants are not expecting any change this week with a 1991 high of $3.7 billion of long-term bonds up for public sale. Dollar bond prices ended the session unchanged to 1/8 point higher.
The Port Authority issue reached the market through an underwriting account headed by PaineWebber Inc. and was comprised of current interest and zero coupon bonds. The account designated a true interest cost of 6.815% and received the verbal award late in the afternoon.
The $89.4 million current interest bonds were comprised of the $76.2 million maximum yield maturity of 2026 priced at 99 as 6 3/4s and serials offered at par and scaled from 4.60% in 1992 to 6.20% in 2001.
The $14.2 million zero coupon bonds were offered to investors at deep discounts to yield from 6.30% in 2002 to 6.75% in 2014.
The Port Authority consolidated bonds are rated AA-minus by Standard & Poor's Corp. and A1 by Moody's Investors Service.
New York traders yesterday cited the increasing influence that New Jersey investors are having on Port Authority issues, producing lower yields on many of the maturities. Port Authority offerings have become increasingly popular with New Jersey investors ever since the passage of a state income tax, they noted.
An officer at PaineWebber reported "strong" bank trust department and "enough" institutional demand so that a comfortable amount of the issue was placed with permanent investors. Anything that is left will "soon be placed with retail." The New Jersey income tax has made tax-exempts more attractive for New Jersey residents and has "broadened the market," for Port Authority bonds, the officer added.
John Haupert, Port Authority Treasurer, said he was "very pleased" with the 6.815% TIC and the "strong support" of the managing underwriters.
In another negotiated offering, a John Nuveen & Co. account marketed $172.5 million Allegany Health System revenue bonds, Fla. The bonds are being issued by the cities of Tampa and St. Petersburg.
The offering included term bonds yielding 6.93% for 6 5/8s of 2011, 6.98% for 6 3/4s of 2017, and 6.92% for 6s of 2021. A $60.5 million remarketing of a 2015 term maturity was offered at a 7.02% return for 7% bonds.
There were also serial bonds scaled from 4.90% in 1992 to 6.60% in 2003.
All of the bonds are being backed by MBIA Corp. and are rated triple-A by Moody's and Standard & Poor's. A John Nuveen representative said there were still some serial bonds in the account.
The Tampa bonds are being issued for St. Joseph's Hospital and the St. Petersburg bonds for St. Mary's Hospital, St. Anthony's Hospital and St. Joseph's Hospital.
In secondary dollar bond trading, New Jersey Turnpike Authority 7.20s, due 2018, inched 1/8 higher to 103 1/8-3/8 to yield 6.61% to the par call in 1999 and 6.70% to the 1993 premium call. Florida State Board of Education 7 1/4s of 2023 were unchanged at 102 3/4-103 1/4 to yield 6.86% to their par call in 2004.
The more recent Florida State Board 6 3/4s of 2021 were also yielding 6.86% and were locked at 98 5/8 in late trading.
In other dollar bond activity, New York LGAC 7s of 2016 were up 1/8 on the day to 97 3/4-7/8, returning 7.19% and Puerto Rico Electric Power Authority 7s of 2021 unchanged at 98 1/8-1/4, yielding 7.14%.
Syndicate price restriction were removed from last week's Sacramento Municipal Utility District insured 6 3/4s of 2019, which were quoted in the free market at 98 1/4-1/2 to yield 6.87%.
Note prices moved modestly higher in advance of today's $4.1 billion California pricing.
New York City tax anticipation notes were trading around at 4.85%. New York tax and revenue anticipation notes were at 5.26% bid, 5.22% offered. And the market for New Jersey notes was at 4.75% bid, 4.70% offered.
Note traders late yesterday were discussing a return of about 4.85% for today's California issue.
Today's bond calendar features a negotiated offering of $750 million New York City genreal obligation bonds. New York traders were estimating a tax-exempt yield in the vicinity of 8.20% for the longest serial bonds yesterday afternoon.
The bonds will be marketed through an account led by Merrill Lynch & Co.
Negotiated Pricings
Johnson City, Tenn., $73.6 million hospital improvement revenue and refunding bonds.
Ratings: Moody's Aaa; S&P's AAA. MBIA insured.
The $43.6 million term bonds of 2016 are being offered at 96 3/4 as 6 3/4s to yield 7.02%. The $13.1 million term bonds of 2006 are tentatively priced at 99 1/2 as 6 7/8s to yield 6.92%. And serial yields are expected to run from 5% in 1992 to 6.50% in 2001.
J.C. Bradford & Co. is managing the underwriting account.
Regional Convention and Sports Complex Authority, Mo. (St. Louis, Mo., sponsor) -- $59.6 million convention and sports facility project bonds, series C 1991. Payable from annually renewable lease payments to be made by St. Louis, Mo.
Ratings: Fitch BBB-minus.
The $10.5 million term bonds of 2001 are tentatively priced at par to yield 7.75%. The $49 million term bonds, due 2021, are being offered at 97 as 8s to yield 8.272%.
Smith Barney, Harris Upham & Co. is senior manager for the underwriters. The official award is expected tomorrow.
Richlands Ranch Metropolitan District No. 2, Colo., $57.7 million GO refunding bonds, series 1991.
The offering is expected to be comprised of $47.7 million term bonds of 2001 priced at 98 3/4 as 6 3/4s to yield 6.926% and serials scaled from 4.80% in 1992 to 6.60% in 2000.
A.G. Edwards & sons and Dain Bosworth Inc. are co-managers. The formal award is expected tomorrow.
University of Massachusetts Building Authority, $41.4 million revenue refunding bonds, series 1991-A. Payment of principal and interest is unconditionally guaranteed by the Commonwealth of Massachusetts.
Ratings: Moody's Baa (expected); S&P's BBB.
The issue was tentatively priced to yield from 5.10% in 1992 to 7.30% in 2004.
The bonds are being marketed through an account led by Alex. Brown & Sons. The written award is expected tomorrow.
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