Municipals improve as Treasuries rally; Dasny hits market with $1.17 billion of state PITs

By Sheri Kasprzak

New York, June 11 – Municipals staged a turnaround Thursday, fueled in part by a Treasury market rally, insiders reported.

Yields on top-rated munis were seen lower by 2 to 3 basis points by the end of the day, traders said. The market improved after a few sessions of disappointment but underperformed rallying Treasuries. The 30-year Treasury bond yield fell by 11 bps, as did the benchmark 10-year note yield.

Meanwhile, negative flows to municipal mutual funds continued. The Investment Company Institute reported outflows of $2 million, light compared to an average of $171 million of weekly outflows for the past three weeks.

Dasny offers debt

Heading up the day’s primary action, the Dormitory Authority of the State of New York hit the market with $1,171,400,000 of series 2015 state personal income tax revenue bonds. The deal was downsized from $1,178,090,000.

The deal included $239,175,000 of series 2015B Group A tax-exempt bonds, $391,325,000 of series 2015B Group B bonds, $413.15 million of series 2015B Group C bonds, $29.92 million of series 2015C bonds and $97.83 million of series 2015D taxable bonds.

The 2015B Group A bonds are due 2017 to 2025 with 5% coupons and 0.62% to 2.61% yields. The 2015B Group B bonds are due 2026 to 2035 with 5% coupons and yields from 2.76% to 3.46%. The 2015B Group C bonds are due 2036 to 2045 with 5% coupons with yields from 3.48% to 3.71%.

The full details of the series 2015C bonds were not immediately available Thursday, but the coupons reportedly range from 3% to 5%.

The 2015D bonds are due 2017 to 2025 with 0.93% to 3.32% coupons and all priced at par.

The bonds were sold competitively.

Proceeds will be used to finance capital projects and refund debt.

HealthEast bonds price

Elsewhere during the session, the St. Paul Housing and Redevelopment Authority of Minnesota offered $138.84 million of series 2015A hospital facility revenue bonds for HealthEast Care System.

The bonds (/BBB-/BBB-) were sold through J.P. Morgan Securities LLC and BofA Merrill Lynch.

The bonds are due 2015 to 2030 with term bonds due in 2035, 2040 and 2044. The serial coupons range from 2% to 5%. The 2035 bonds have a 5.25% coupon and priced at 104.57, and the 2040 bonds have a 5% coupon and priced at 102.438. The 2044 bonds have a 5% coupon and priced at 102.026.

Proceeds will be used to finance capital improvements to the Woodwinds Hospital campus.

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