Municipals close mixed as new issues hit market; New York sells $329.16 million G.O. bonds

By Sheri Kasprzak

New York, March 10 – Municipals rounded out the session with longer maturities weaker and shorter bonds slightly better, insiders said.

The two-year yield fell by about a basis point even as the five-year yield rose by 2 bps to 1.43% and the 10-year yield rose by 3 bps to 2.20%. The 30-year yield climbed 3 bps to 3.12%.

Meanwhile, the week’s new issues started pricing, led by a general obligation sale from the State of New York.

New York leads offerings

The state sold $329,155,000 of series 2015 G.O. bonds through competitive bid.

The deal included $142,485,000 of series 2015A tax-exempt bonds, $5.64 million of series 2015B taxable bonds and $181.03 million of series 2015C refunding bonds.

The 2015A bonds are due 2016 to 2036 with term bonds due in 2040 and 2045. The serial coupons range from 3% to 5% with yields from 0.20% to 3.35%. The 2040 bonds have a 3.25% coupon and priced at 95.858 to yield 3.50%. The 2045 bonds have a 3.25% coupon and priced at 95.38 to yield 3.50%.

The 2015B bonds are due 2016 to 2025 with coupons from 0.45% to 2.80% and all priced at par.

The 2015C bonds are due 2015 to 2034 with coupons from 2.25% to 5% and yields from 0.12% to 3.21%.

The bonds (Aa1/AA+/AA+) were sold competitively. Citigroup Global Markets Inc. won the bid for the 2015A bonds at a 2.849908% true interest cost, and Roosevelt & Cross Inc. won the bid for the 2015B bonds at a 2.369585% TIC. Morgan Stanley & Co. LLC took the 2015C bonds at a 1.743774% TIC.

Proceeds will be used to fund capital expenditures and refund existing debt.

Refunding saves $33.2 million

The refunding portion of the deal will save taxpayers about $33.2 million on a cash-flow basis and $26.8 million on a net present value basis over the life of the bonds, said a statement from New York comptroller Thomas DiNapoli.

“These bonds, all of which have been approved by the voters, will pay for essential investments in transportation and environmental projects,” DiNapoli said in the statement.

“Once again, there was a significant investor interest in the state’s bonds. The combination of strong market interest and a historically low interest rate environment translated into favorable pricing for the state.”

Alaska brings notes

Also during the session, Alaska offered up $155,215,000 of series 2015A G.O. bond anticipation notes. The deal was downsized from $162.7 million.

The notes (MIG 1/SP-1+/F1+) were sold competitively with BofA Merrill Lynch winning the bid at a 0.154064% TIC.

“The state is required to sell original issue general obligation bonds on a competitive basis,” Deven Mitchell, debt manager with the state treasurer’s office, said in an interview Tuesday.

The notes are due March 18, 2016, have a 5% coupon and priced at 104.829.

Proceeds will be used to refund the costs of transportation projects in the state.

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