Municipals rally after Treasuries reverse direction on data; New Mexico taps market

By Sheri Kasprzak

New York, Feb. 18 – Municipals finally reversed direction Wednesday following in line with rallying Treasuries, market insiders said.

A trader in the afternoon said yields were lower by 4 basis points to 5 bps as the five-year Treasury yield fell by 10 bps and the 10-year yield fell by 7 bps.

Treasuries were pushed during the day by lackluster economic data and the release of the Federal Open Market Committee’s January meeting minutes, in which the FOMC indicated that it would hold the Federal Funds rate steady, but improving economic conditions could herald a rate hike sooner than anticipated.

New Mexico details bonds

Looking to primary news, the State of New Mexico released details on its $141,645,000 of series 2015 capital projects general obligation bonds. The offering priced Tuesday.

The bonds (/AA+/) were sold competitively with Morgan Stanley & Co. LLC winning the bid at a 1.689292% true interest cost, said Stephanie Schardin Clarke, deputy secretary for the state’s Department of Finance and Administration.

“The State Board of Finance is able to sell its bond competitive or negotiated, but by policy always sells competitively,” Schardin Clarke said Wednesday.

The bonds are due 2016 with 2025 with 5% coupons and yields from 0.2% to 2.13%.

Proceeds will be used to finance the construction, acquisition and improvement of senior centers, library acquisitions and higher education, special schools and tribal school improvements.

Aldine ISD brings bonds

Elsewhere during the day, the Aldine Independent School District of Texas came to market with $50 million of series 2015 school building bonds.

The bonds (Aaa/AAA/) were sold competitively with Robert W. Baird & Co. winning the bid for the offering at a 3.185412% true interest cost, said Anne-Marie Hazzan, the district’s assistant superintendent of finance. BofA Merrill Lynch was the second lowest bidder with a 3.312651% TIC, Hazzan said.

“We are not required to sell debt competitively, but we felt we could get the best rate for the district by doing so,” Hazzan said in an interview Wednesday.

The bonds are due 2018 to 2040 with 3% to 5% coupons and 0.8% to 3.43% yields.

Proceeds will be used to acquire, equip, construct and furnish school buildings for the district.

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