Municipals weaken but outperform Treasuries; Michigan Finance offers $324.33 million of bonds

By Sheri Kasprzak

New York, Dec. 3 – Municipals wrapped up Thursday much softer, but the market still outperformed Treasuries, which sank on disappointing actions from the European Central Bank and interest rate hike talk from Federal Reserve Chairwoman Janet Yellen, market sources said.

Yields on top-rated municipals rose by as much as 7 basis points, traders said Thursday afternoon.

Meanwhile, the 10-year benchmark Treasury note yield climbed 15 bps to end at 2.33%, and the 30-year bond yield rose by 16 bps to 3.07%.

Michigan Finance prices deal

Among Thursday’s lighter primary activity, the Michigan Finance Authority priced $324,325,000 of series 2015 local government program water supply system revenue bonds. The offering was upsized from $284,615,000.

The offering included $197.66 million of series 2015C bonds, $89.43 million of series 2015D-1 bonds and $37,235,000 of series 2015D-2 bonds.

The 2015C bonds are due 2026 to 2035 with a term bond due in 2017. The serial bonds have 5% coupons with 3.13% to 3.71% yields. The 2017 bonds have a 3% coupon and priced at 102.792 to yield 1.17%.

The 2015D-1 bonds are due 2017, 2019 and 2020 to 2035 with 3% to 5% coupons and yields from 0.95% to 3.51%.

The 2015D-2 bonds are due July 1, 2034, have a 5% coupon and priced at 110.711 to yield 3.66%.

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

Proceeds will be used to purchase obligations held by the Detroit Water and Sewerage Department.

Ohio Water offers bonds

Among the session’s other deals, the Ohio Water Development Authority sold $240 million of series 2015A water pollution control loan fund revenue bonds. The deal was upsized from $210 million.

The bonds (Aaa/AAA/) were sold through RBC Capital Markets LLC and Stifel, Nicolaus & Co. Inc.

The bonds are due 2020 to 2026 with 5% coupons and 1.18% to 2.15% yields, according to a term sheet.

Proceeds will be used to refund the authority’s series 1997, 2002, 2003, 2004, 2005, 2005B, 2009, 2010B-C, 2011B, 2012A and 2014 revenue bonds.

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