Municipals close weaker as Treasuries struggle ahead of FOMC; Texas Transportation sells bonds

By Sheri Kasprzak

New York, Sept. 16 – Municipals rounded out the day weaker as Treasuries were hit by foreign outflows data, market sources said.

Yields on top-rated municipals were higher by 1 basis point in spots as the 30-year Treasury bond yield and 10-year Treasury bond yield rose by 2 bps.

In the broader muni market Wednesday, Puerto Rico is getting closer to a restructuring agreement.

The commonwealth is struggling with a $27.8 billion financing gap over five years. The gap will be reduced by $11.9 billion through various revenue increases and expense reductions, narrowing the gap to $15.9 billion. The island’s debt service totals of $18.1 billion over the next five years would be eliminated, turning the commonwealth’s hole into a $2.2 billion surplus. The plan was proposed by working group of government officials and outside advisers.

Texas Transportation upsizes deal

Heading up Wednesday’s new-issue action, the Texas Transportation Commission sold $889,595,000 of series 2015A mobility fund general obligation refunding bonds. The offering was upsized from $750 million.

The bonds (Aaa//AAA) were sold through senior managers J.P. Morgan Securities LLC and Piper Jaffray & Co.

The bonds are due 2018 to 2036 with 3.2% to 5% coupons.

Proceeds will be used to refund existing bonds for debt service savings.

OSF Healthcare bonds price

Another significant offering came from the Illinois Finance Authority, which priced $368,075,000 of series 2015A revenue bonds for OSF Healthcare System.

The bonds (A2/A/A) were sold through Barclays and Jefferies & Co.

The bonds are due 2017 to 2035 with term bonds due in 2037 and 2045. The serial coupons range from 4% to 5%. The 2037 bonds have a 4.125% coupon and priced at 96.5, and the 2045 bonds have a 5% coupon and priced at 105.441.

Proceeds will be used to construct, improve, equip and renovate OSF facilities and to refund the authority’s series 2007A, 2009A and 2009E revenue bonds.

L.A. Water sells debt

In other primary activity, the Los Angeles Department of Water and Power of California sold $268.59 million of series 2015B power system revenue bonds. The offering was downsized slightly from $271,195,000.

The bonds (Aa3/AA-/AA-) were sold through Citigroup Global Markets Inc.

The bonds are due Dec. 1, 2018 and have 3%, 4% and 5% coupons, each with a 1.03% yield.

Proceeds will be used to refund the department’s series 2012C power system revenue bonds.

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