Municipals end flat to firmer as week’s largest deal prices; Pennsylvania brings $1.24 billion

By Sheri Kasprzak

New York, May 27 – Municipals rounded out Wednesday unchanged to slightly better as the week’s largest deal priced, market insiders said.

The 30-year triple-A bond yield fell by 2 basis points to close at 3.21%, and the 10-year yield remained flat at 2.25%, said a trader in the afternoon.

Municipals outperformed Treasuries, which saw yields end flat to slightly lower, market sources said. The 30-year Treasury yield fell by 1 bp to 2.88% after a successful note auction and month-end profit-taking.

Pennsylvania sells G.O. bonds

Heading up the day’s primary activity, Pennsylvania sold $1,237,230,000 of series 2015 general obligation bonds, said a pricing sheet.

The deal included $460 million of second series 2015 bonds and $777.23 million of first series 2015 refunding bonds.

The second series bonds are due 2016 to 2035 with 3.25% to 5% coupons. The first series bonds are due 2016 to 2026 with 5% coupons.

The bonds were sold competitively. BofA Merrill Lynch won the bid.

Proceeds will be used to provide funding for construction, acquisition and rehabilitation of capital facilities projects, capital highway and bridge projects, environmental maintenance and protection, open space and farmland preservation and watershed protection and to refund outstanding bonds.

D.C. coordinates deal

Looking out on the horizon, the District of Columbia will soon be in the market with $534,435,000 of series 2015 G.O. bonds.

The offering includes $500 million of series 2015A G.O. bonds and $34,435,000 of series 2015B G.O. refunding bonds, according to a preliminary official statement.

The bonds will be sold through Citigroup Global Markets Inc.

The 2015A bonds are due 2018 to 2035 with a term bond due in 2040. The 2015B bonds are due 2025 to 2027.

Proceeds will be used to finance capital projects and to refund the city’s series 2005B G.O. bonds.

The city last came to market with G.O. bonds in October 2014 when it sold $515,545,000 of debt. The longest maturity for those bonds is 2038 with coupons from 3% to 5% and yields from 0.58% to 3.20%.

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