Municipals little changed ahead of $8.4 billion calendar; Chicago finishes $1.09 billion deal

By Sheri Kasprzak

New York, July 17 – Municipals were mostly flat Friday to close a busy week for primary and secondary action, traders said.

With about $9.9 billion of new deals priced during the week ended Friday and about $11.7 billion of trading volume reported on Thursday, the busiest trading day, it was a week filled with activity.

That activity is poised to continue into the week ahead with about $8.4 billion of new offerings coming up.

Dasny leads new deals

The new-issue action will be led by the Dormitory Authority of the State of New York. The authority is set to price $1,167,875,000 of series 2015A state sales tax revenue bonds (/AAA/AA+) through senior managers Morgan Stanley & Co., LLC, RBC Capital Markets LLC and Siebert Brandford Shank & Co. LLC.

Proceeds from the offering will be used to refund some outstanding state-supported debt.

Chicago sells G.O. bonds

Among the larger deals priced during the week, Chicago sold $1,089,860,000 of series 2015 general obligation bonds.

The deal included $347 million of series 2015A bonds and $742.86 million of series 2015B taxable bonds.

The 2015A bonds are due 2019 to 2035 with a term bond due in 2039. The serial coupons range from 5% to 5.5% with yields from 3.90% to 5.67%. The 2039 bonds have a 5.5% coupon and priced at 97.553 to yield 5.69%.

The 2015B bonds are due 2019 to 2023 with term bonds due in 2033 and 2042. The serial coupons range from 5.383% to 6.361% and all priced at par. The 2033 bonds have a 7.375% coupon and priced at 99.309 to yield 7.45%, and the 2042 bonds have a 7.75% coupon and priced at 97.666 to yield 7.98%.

The bonds (/BBB+/A-) were sold through senior manager Morgan Stanley.

Proceeds will be used to repay short-term debt, terminate a sale/leaseback of the Orange Line rapid transit rail line and terminate an interest rate swap agreement related to sales tax revenue bonds.

Takes off liquidity pressure

The offering, according to Alan Schankel, managing director with Janney Montgomery Scott LLC, takes off some liquidity pressure for the city.

“The good news for the Windy City is diminished near-term liquidity pressure, since the financing completes the city’s elimination of variable-rate debt and associated exposure to liquidity support agreements and swaps,” he said in a note Friday.

“Poor pension funding continues to loom over future finances. Demand for the tax-free series saw price bumps on Thursday morning preliminary pricing with yields adjusted by 2 to 8 basis points in many maturities.”

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