Municipals rally in sympathy with Treasuries; New Jersey Turnpike bonds reprice at lower yields

By Sheri Kasprzak

New York, May 14 - Municipals followed along with a Treasuries rally on Wednesday, buoyed by news from the euro zone that rates could be lowered soon to combat low inflation, market sources reported.

Yields on municipals were lower by 4 basis points to 6 bps, following pretty much in line with Treasuries, said a trader during the afternoon. In addition to the Treasury rally, municipals got boosted from solid secondary market activity during the day.

The European Central Bank sparked chatter that rate cuts are imminent when board members noted that inflation remains very low - at 0.7% for the euro zone, far below the 2% target.

The 30-year Treasury bond yield fell by 7.5 bps on the session to end at 3.379%. The 10-year note yield fell by 7 bps to 2.55%, and the five-year note yield fell by 5 bps to 1.569%.

Turnpike bonds price

Moving to the day's primary action, the New Jersey Turnpike Authority offered up $1 billion of series 2014A turnpike revenue bonds, the largest bond deal of the week.

The bonds (A3/A+/A) were sold through Goldman Sachs & Co.

The bonds are due 2027 to 2035 with 4% to 5% coupons and 3.1% to 4.0% yields, said a pricing sheet.

The bonds were repriced with yields adjusted 1 bp to 2 bps lower, said a market source.

Proceeds will be used to make capital improvements to the turnpike system as part of the authority's 10-year program.

In May 2013, the authority brought $90.88 million of turnpike revenue bonds with yields from 2.68% to 3.75%.

U of Cincinnati brings debt

Also during the session, the University of Cincinnati priced $94,625,000 of series 2014B general receipts bonds.

The bonds (Aa3/AA-/) were sold competitively, but the winning bidder was not immediately available Wednesday afternoon.

The bonds are due 2015 to 2036 with 4% to 5% coupons and yields from 0.23% to 3.62%, said a pricing sheet.

Proceeds will be used to finance the installation of a new student information system, complete a roof replacement, make improvements to the university's teaching college and refund its series 2004A and 2006A general receipts bonds.

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