Municipals dip with Treasuries ahead of light primary supply; Florida DOT sells refunding bonds

By Sheri Kasprzak

New York, March 21 – Municipals ended Monday weaker along with Treasuries, traders said.

Yields on top-rated munis rose by 1 basis point to 2 bps with the 10-year triple-A muni bond yield up 2 bps at 1.93% and the 30-year bond yield up 2 bps to 2.93%.

Meanwhile, Treasuries were weaker as a couple of Federal Reserve presidents hinted at an April or June interest rate hike. The 30-year Treasury bond and 10-year note yields each rose by 4 bps to close at 2.72% and 1.92%, respectively. The five-year note yield also ended the day 4 bps higher at 1.38%, and the two-year note yield edged up 3 bps to 0.87%.

This week, supply will drop to about $6.2 billion ahead of the Good Friday holiday.

Houston deal set

Heading up the lighter calendar, the City of Houston is scheduled to price $600 million of public improvement refunding bonds.

The bonds will be sold through Loop Capital Markets LLC.

Proceeds will refund outstanding public improvement bonds and certain commercial paper notes.

Energy Northwest to price

Also on the calendar, Energy Northwest of Washington state is slated to price $497.15 million of electric revenue refunding bonds (Aa1/AA-/AA) through BofA Merrill Lynch and J.P. Morgan Securities LLC.

The offering includes $192,085,000 of series 2016A project 1 bonds, $95,485,000 of series 2016A Columbia Generating Station bonds, $200,705,000 of series 2016A project 3 bonds, $1.28 million of series 2016B taxable project 1 bonds, $2,245,000 of series 2016B taxable Columbia Generating Station bonds and $5.35 million of series 2016B taxable project 3 bonds.

Proceeds will be used to refund the utility’s series 1989B, 2006A, 2007A, 2007C, 2008A, 2008D, 2010A and 2012A project 1 bonds; its series 2004C, 2007A, 2008A, 2009A, 2009C, 2011A and 2014A-B Columbia Generating Station bonds; its series 2004A, 2006A, 2007A, 2007C, 2008D, 2010A-B and 2012B-C project 3 bonds; and to repay a 2015 line of credit.

Florida DOT bonds sold

Heading up Monday’s light primary action, the Florida Department of Transportation hit the market with $113.35 million of series 2016B turnpike refunding revenue bonds.

The bonds (Aa2) were sold competitively.

The bonds are due 2017 to 2027 with 2.5% to 5% coupons and yields from 0.66% to 2.56%.

Proceeds will be used to refund existing turnpike revenue bonds.

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