Municipal yields improve again as investors flee risk; Boston sells $181.53 million G.O. bonds

By Sheri Kasprzak

New York, March 16 - Municipal yields were again lower on Wednesday as investors fled risky securities for safer bonds, said market insiders. Meanwhile, the City of Boston brought $181.525 million of general obligation bonds competitively.

"We're following Treasuries again," said one trader.

"Everyone is risk-averse right now, so bonds are becoming the place to be. We're sailing right along with Treasuries. Right now, short bonds are probably better by 3 to 4 bps. Longer bonds aren't moving by that much."

Meanwhile, the big picture for municipals might be good, but on the micro level, some issuers are struggling.

"Victorville, Calif., may be the next California municipal bond problem, following in the footsteps of Vallejo, now in Chapter 9 bankruptcy, and Bell, the city of overpaid administrators and underserved citizens," said Alan Schankel, managing director with Janney Montgomery Scott LLC.

Schankel said the city, with a population of 111,000, is getting close to insolvency with about $500 million of outstanding debt, about $47 million of general fund revenues and a projected $5.3 million deficit for fiscal year 2011.

Boston G.O. bonds price

Heading up the day's light primary action, Boston came to market with $181.525 million of series 2011 G.O. bonds, said pricing sheets.

The bonds were sold competitively, but calls to the issuer for the winner were not immediately returned.

The offering included $86.355 million of series 2011A bonds, $38.9 million of series 2011B bonds, $41.625 million of series 2011C qualified school construction bonds and $14.645 million of series 2011D bonds.

The 2011A bonds are due 2012 to 2031 with coupons from 2.5% to 5%. The 2011B bonds are due 2012 to 2027 with coupons from 3% to 5%. The 2011C bonds are due 2017 to 2018 with a term bond due in 2026. The serial coupons range from 3% to 3.3%. The 2026 bonds have a 4.4% coupon priced at par. The 2011D bonds are due 2013 to 2016 with 3% to 4% coupons.

Proceeds will be used to advance refund the city's series A convention center loan special obligation bonds and finance various capital projects.

Hancock sells Blanchard bonds

Elsewhere, Hancock County in Ohio priced $108.675 million of series 2011A hospital facilities revenue bonds on Wednesday for Blanchard Valley Regional Health Center, said a pricing sheet.

The bonds (A3/A-/) were sold through senior manager Bank of America Merrill Lynch.

The bonds are due 2011 to 2021 with term bonds due 2026, 2030 and 2034. The serial coupons range from 3% to 5.25%. The 2026 bonds have a 5.75% coupon priced at 97.478. The 2030 bonds have a 6.5% coupon priced at 105.12. The 2034 bonds have a 6.25% coupon priced at 97.818. The 2011 bonds were not publicly offered.

Proceeds will be used to refund the health center's series 2004 bonds.

The county seat is Findlay.

Florida housing bonds price

In other news, Florida Housing Finance Corp. sold $100.465 million of series 2011 homeowner mortgage revenue bonds, said a pricing sheet.

The offering included $65.61 million of series 2011-1 AMT bonds, $27.155 million of series 2011-2 non-AMT bonds and $7.7 million of series 2011-3 non-AMT bonds.

The 2011-1 bonds are due 2011 to 2019 with a term bond due in 2041. The serial coupons range from 1.15% to 4.45%, all priced at par. The 2041 bonds have a 5% coupon priced at 118.434.

The 2011-2 bonds are due 2019 to 2022 with a term bond due in 2026. The serial coupons range from 3.55% to 4.25%, all priced at par. The 2026 bonds have a 5% coupon priced at par.

The 2011-3 bonds are due Jan. 1, 2027 and have a 5.05% coupon priced at par.

Citigroup Global Markets Inc. was the senior manager.

Proceeds will be used to fund mortgage loans and to refund debt.

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