Munis close mixed as new issues dominate market action; Indiana Finance brings $676.8 million

By Sheri Kasprzak

New York, March 12 - Municipals were largely mixed on Tuesday, said traders reached during the session.

"There's still a bit of hesitance out long," said one trader.

"The focus is mostly on bonds 10 years and in. Really, most of the focus is primary, but we're seeing block trades inside of 10 years."

The week has gotten off to a difficult start.

"With one of the busiest new issues weeks of the year looming, caution abounded, pushing benchmark yields a bit higher, with the real test ahead today [Tuesday] when the bulk of the new issue slate begins to price," said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"Federal Reserve flows data for 4Q12 shows banks and mutual funds as the only inverting segments adding to municipal investments, with total municipal debt, at $3.714 billion, the lowest since 3Q11."

Harrisburg to miss payment

Moving to distressed news, the City of Harrisburg, Pa., is expected to miss its semiannual general obligation debt service payment, amounting to $5 million of zero-coupon bonds due on March 15. This will mark the third time the city has missed its payment.

"The bonds are backed by Ambac insurance, which made payments to bondholders on March 15 and September 15 of last year and is expected to make the upcoming payment," Schankel said.

Indiana Finance prices bonds

Heading up primary action, the Indiana Finance Authority came to market with $676,805,000 of series 2013 private activity bonds, said a pricing sheet.

The bonds were sold through BofA Merrill Lynch.

The bonds are due 2019, 2035, 2040, 2044, 2048 and 2051. The bonds have 5% coupons except for the 2051 bonds, which have a 5.25% coupon. The 2019 bonds priced at 109.74, the 2035 bonds priced at 103.566, the 2040 bonds priced at 101.76, the 2044 bonds priced at 100.871, the 2048 bonds priced at 99.827, and the 2051 bonds priced at 102.301.

Proceeds will be used to finance the East End Crossing Project, a cross-river transportation project intended to serve the needs of the Louisville, Ky./Southern Indiana region.

New York water bonds sold

Elsewhere during the session, the New York City Municipal Water Finance Authority brought $537.61 million of series 2013DD water and sewer second general resolution revenue bonds, said a pricing sheet.

The bonds were sold through Ramirez & Co. Inc.

The bonds are due 2027, 2034 to 2035 and in 2038. The 2027 bonds have a 3.125% coupon and priced at par. The 2038 bonds have a 3.75% coupon priced at par, a 4% coupon priced at 102.274 and a 5% coupon priced at 113.079. The serial coupons range from 3.5% to 5%.

Proceeds will be used to redeem first resolution bonds.

East Brunswick sells

Also during the session, the Township of East Brunswick, N.J., sold $50,784,000 of series 2013 G.O. bonds and bond anticipation notes, said a pricing sheet and the township's chief financial officer, L. Mason Neely.

The G.O. bonds (Aa1) were sold competitively with Janney Montgomery Scott LLC winning the bid at a 2.767212% net interest cost. The bonds are due 2014 to 2033 with 2% to 3% coupons.

"As you can see [from the bid sheet], we had a good number of bidders," Neely said Tuesday.

There were nine bidders for the bonds.

"The notes also had a good number of bidders, and we sold to TD Securities for 0.485%," he said.

The bond anticipation notes were also competitively with TD Securities (USA) Inc. winning the bid at a 0.485% net interest cost. The notes are due March 21, 2014 and have a 1% coupon to yield 0.47%.

Proceeds will be used to finance repairs and infrastructure improvements to facilities damaged by Hurricane Sandy.

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