Muni yields fall as Treasuries rally after FOMC meeting; Honolulu brings $888.64 million bonds

By Sheri Kasprzak

New York, March 18 – Municipal yields dropped on the session by as much as 8 basis points, market insiders said, after Wednesday’s Federal Open Market Committee meeting sent Treasuries into a rally.

The 30-year yield dropped by 8 bps to 3.05%, and the 10-year and five-year yields both fell by 2 bps, said a trader in the afternoon.

“We’ve been watching yields drop pretty much all day,” one trader said. “We’re following Treasuries but underperforming.”

Indeed, the five-year Treasury yield fell by 15 bps, and the 10-year yield fell by 13 bps to 1.94%.

Honolulu brings G.O. bonds

Looking to Wednesday’s primary action, the largest offering of the week hit the market. The City of Honolulu, Hawaii, offered up $888,635,000 of series 2015 general obligation bonds. The deal was upsized from $878,805,000.

The deal included $379.55 million of series 2015A tax-exempt bonds, $210.48 million of series 2015B tax-exempt bonds, $249.24 million of series 2015C tax-exempt bonds, $27,305,000 of series 2015D tax-exempt bonds and $22.06 million of series 2015E taxable bonds, said a term sheet.

The 2015A bonds are due 2015 to 2039 with 4% to 5% coupons and 0.08% to 3.09% yields.

The 2015B bonds are due 2018 to 2031 with 5% coupons and 1.11% to 2.87% yields.

The 2015C bonds are due 2019 to 2033 with 1.375% to 5% coupons and 1.40% to 3.55% yields.

The 2015D bonds are due 2016, have a 5% coupon and priced at 106.813 to yield 0.43%.

The 2015E bonds are due 2015 to 2039, have 0.35% to 3.99% coupons and priced at par.

The bonds were sold through BofA Merrill Lynch and Piper Jaffray & Co.

Proceeds will be used to finance capital improvements, refund G.O. commercial paper notes and refund series 2005B-E, 2007A, 2009A and 2011A G.O. bonds.

San Mateo transit deal prices

In other primary activity, the San Mateo County Transit District of California sold $210.28 million of series 2015 limited tax bonds.

The bonds (/AAA/AA+) were sold through senior managers J.P. Morgan Securities LLC and Barclays.

The bonds are due 2019 to 2034 with coupons from 3% to 5% and yields from 1.17% to 3.40%, according to a pricing sheet.

Proceeds will be used to refund the district’s series 1993A, 2005A and 2009A revenue bonds.

Kentucky Municipal Power trades

Moving to the secondary side of the market, the Kentucky Municipal Power Agency’s recently priced refunding bonds were trading higher on Wednesday.

The 4% 2039 bonds were seen at 4.103% Wednesday evening after pricing Tuesday at 4.14%.

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