Maryland issued $475 million of general-obligation bonds today, less than a week after Moody’s Investors Service revised the outlook on the state’s Aaa rating to stable, ending a 23-month stretch with a negative view.
The offer included a tax-exempt portion maturing in August 2023 that was priced to yield 2.75 percent, according to three people familiar with the sale who asked for anonymity because they weren’t authorized to provide pricing details. The interest rate is about the same as benchmark 10-year AAA munis, Bloomberg data show.
Maryland general-obligation bonds now have top grades and stable outlooks from Moody’s, Standard & Poor’s and Fitch Ratings. Only seven other states have the highest ranks from all three companies.
Moody’s on July 19 also changed its outlook to stable from negative on Missouri, New Mexico and Virginia, which the company said have strong economic ties to the federal government. On Aug. 2, 2011, Moody’s revised the U.S. rating outlook to negative, and two days later did the same to five states and 303 other issuers in the $3.7 trillion municipal-debt market.
“While Maryland has certain linkages to the federal government, we are pleased that Moody’s restoration of our stable outlook refocuses attention to Maryland’s strong financial management policies and sound economy,” Maryland Treasurer Nancy Kopp said in a statement last week.
Maryland sold the bonds as the muni market is poised to decline in July for the first time since 2005, according to Bank of America Merrill Lynch data. Top-rated state and local debt is outperforming lower-rated securities this month, the data show.
Investors should “strongly favor AA- and AAA-category credits going forward,” according to a report this week from Concord, Massachusetts-based Municipal Market Advisors.
Utah, also with three top credit ratings, sold $226 million of general obligations this month with a 10-year interest rate 0.12 percentage point less than benchmark AAA munis.
J.P. Morgan Securities LLC won the competitive bid for the $435 million tax-exempt portion of the sale, according to data compiled by Bloomberg. The $40 million of taxable bonds was awarded to Jefferies LLC.
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