Munis end week flat after staging rally; Utah Regents prices $397 million of Libor index notes

By Sheri Kasprzak

New York, Sept. 23 - Municipals rounded out Friday mostly unchanged after a major rally on Thursday shoved yields even lower, especially on the long end of the curve, said market insiders.

With the recent deluge of new offerings, the market took Friday as a chance to digest some of that supply and wait for the coming week's primary action, said one trader.

"There's a lot to absorb," he said. "We're taking a bit of a breather today, it looks like."

Seven-year bonds were the exception. Yields at seven years were down almost 4 basis points Friday afternoon.

Meanwhile, J.R. Rieger, senior vice president of fixed income indexes at Standard & Poor's, said Friday in a report that the middle of the muni bond yield curve has seen a dramatic shift in yields.

"Investment-grade tax-exempt bonds maturing in 2016 remain a good example of what has been happening," said Rieger in a statement.

"These five-year bonds are yielding a tax-exempt 1.29%, erasing last week's bump in yields and recording a total return over 6.3% for the year to date. Ten-year municipal bonds have seen a 23 bps move this month and 125 bps move this year, resulting in over 6.1% total return for the quarter and over 12% return for the year to date."

Rieger also noted that the market has absorbed the new issue supply and has continued to have low incidents of default.

Utah Regents bring notes

In primary action, the Board of Regents of the State of Utah priced $397 million of series 2011-1 taxable Libor index notes, said an official statement.

The offering included $205 million of series 2011-1-A1 notes, $137 million of series 2011-1-A2 notes and $55 million of series 2011-1-A3 notes.

The A1 notes are due May 1, 2023, bear interest at Libor plus 50 bps and priced at 99.476. The A2 notes are due May 1, 2029, bear interest at Libor plus 85 bps and priced at 97.379. The A3 notes are due May 1, 2035, bear interest at Libor plus 85 bps and priced at 93.269.

The notes (Aaa/AA+/) were sold through RBC Capital Markets LLC.

Proceeds will be used to provide long-term financing for student loans and to refund existing debt, including the board's series 1998 auction-rate bonds.

Hartford Healthcare prices

In other pricing news, the Connecticut Health and Educational Facilities Authority sold $254.73 million of series 2011A revenue bonds for Hartford Healthcare, said a pricing sheet.

The bonds (A2/A/A) were sold through Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC. The bonds are due 2014 to 2023 with term bonds due in 2026, 2032 and 2041. The serial coupons range from 3% to 5%. The 2026 bonds have a split maturity with a 4.375% coupon priced at 99.402 and a 5% coupon priced at 104.468. The 2032 bonds have a 5% coupon priced at 100.837, and the 2041 bonds have a 5% coupon priced at 100.452.

Proceeds will be used to finance or refinance improvements and expansions to the Hartford Healthcare facilities and to refund existing debt.

Sacramento sells pension bonds

Elsewhere, Sacramento County, Calif., sold $183.365 million of series 2011 taxable pension obligation bonds, said a pricing sheet.

The bonds (A3/BBB+/A-) were sold through J.P. Morgan Securities LLC and Morgan Stanley.

The bonds are due 2012 to 2014 and 2018 to 2021 with a term bond due in 2023. The serial coupons range from 2.83% to 6.12%. The 2023 bonds have a 6.42% coupon priced at par.

Proceeds will be used to refund the county's series 1995A-B and 2009 taxable pension obligations.

Chicago parks get funding

Also during the session, the Chicago Park District of Illinois priced $155.865 million of series 2011 general obligation bonds, said a pricing sheet.

The offering included $36.055 million of series 2011A limited tax park bonds, $21.56 million of series 2011B limited tax refunding bonds, $71.88 million of series 2011C unlimited tax refunding bonds and $26.37 million of series 2011D unlimited tax refunding bonds.

The bonds (Aa2/AA+/AAA) were sold through William Blair & Co. Inc. and Morgan Stanley.

The 2011A bonds are due 2013 and 2024 to 2026 with term bonds due in 2031, 2033 and 2036. The 2013 bonds have a 3% coupon to yield 0.38%. The serials have 3.2% to 3.6% coupons with yields from 3.29% to 3.71%. The 2031 bonds have a 4.2% coupon priced at par, and the 2033 bonds have a 4.25% coupon to yield 4.34%. The 2036 bonds have a 5% coupon to yield 4.25%.

The 2011B bonds are due 2012 to 2021 with 3% to 5% coupons and yields from 0.24% to 2.58%.

The 2011C bonds are due 2012 to 2029 with 2% to 5% coupons and yields from 0.24% to 3.9%.

The 2011D bonds are due 2012 to 2019 with 3% to 5% coupons and yields from 0.24% to 2.11%.

Proceeds will be used to build, maintain and repair the city's parks and to redeem all of the district's series 2001A and 2001C G.O. bonds.

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