Municipals flat to softer as market absorbs supply; Marta executive details bond offering

By Sheri Kasprzak

New York, April 15 – Municipals rounded out the session on a mixed note, with some maturities holding steady while others were weaker, traders said.

The weakness was most apparent between five and 10 years with yields up by 2 basis points to 3 bps. Elsewhere, yields were flat, said a trader in the late afternoon.

The market continued to absorb new issues in the week’s massive $10 billion slate with trading described as “brisk” by one market insider.

Sparrow brings offering

Among those offerings, the Michigan Finance Authority brought $181.21 million of hospital revenue and refunding bonds for Sparrow Obligated Group, one of several health care bonds in the market this week.

The bonds (A1/A+/) were sold through senior manager RBC Capital Markets LLC.

The bonds are due 2015 to 2036 with term bonds due in 2040 and 2045. The serial coupons range from 3% to 5% with 0.3% to 4.04% yields. The 2040 bonds have a 4% coupon priced at 98.735 to yield 4.08%, and the 2045 bonds have a 5% coupon priced at 110.658 to yield 3.72%.

Proceeds will be used to construct a four-story medical office building at Sparrow Hospital in Ionia, Mich., as well as refund series 2005 and a portion of 2007 revenue bonds.

Marta deal detailed

Elsewhere during the day, the Metropolitan Atlanta Rapid Transit Authority released more details on its $87,015,000 offering of series 2015A sales tax revenue bonds.

The bonds (/AA+/AA-) were sold competitively on Tuesday with J.P. Morgan Securities LLC winning the bid at a 4.079% true interest cost, said Kevin Hurley, director of treasury services for the authority in an interview Wednesday afternoon.

“This transaction was accomplished through a straight competitive bid,” Hurley said. “Market factors are always a consideration in conducting a debt sale, and Marta and its financial adviser have been monitoring the markets for the transaction and were very confident that the pricing would be competitive.

“Marta will typically use a bid to execute plain vanilla bond sales. Negotiated sales may be used but would be reserved for more complicated transactions.”

The bonds are due 2041 to 2045 with 5% coupons and yields from 3.15% to 3.19%.

Hurley said the authority’s most recent comparable deal came in 2014, when it sold bonds at a 3.77% all-in cost.

“The rate environment has risen slightly since the issue of the series 2014A but is still much lower than the bonds issued prior to the economic downturn at rates typically between 5% and 5.25%. Also, these are 30-year bonds with an effective life of 28 years with $100 million total proceeds since the 5% coupon bonds were issued at a premium.”

Proceeds will be used to finance capital projects to enhance life safety and maintain the system.

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