Barclays priced a high profile $1.5 billion Wisconsin appropriation muni bond deal this week. This deal faced numerous challenges:
Size, one of the biggest deals to date.
Credit: one notch lower as a moral obligation issue vs general obligation, market has been preferring top tier credits only.
Timing: Late March early April historically are very weak performance times for the municipal market.
To meet these challenges, Barclays had to price the deal at 100 bps higher than general municipal general obligation issue. Final tax exempt yield highlights are:
10 year @ 4.63%
15 year @ 5.44%
20 year @ 5.82%
Thanks to the Federal Reserve Bank meeting announcement during its pricing, the ensuing treasury rally caused the deal to be a blow out, with minimal price adjustments. Mainline will be stocking some of these bonds, first come, first serve, and may offer excellent income for investors willing to assume a little higher credit risk.