Munis close weaker as week’s remaining deals price; Illinois offers $480 million G.O. bonds

By Sheri Kasprzak

New York, Jan. 14 – Municipals rounded out a busy session on a softer note as the remainder of the week’s deals priced, market insiders said.

Yields on top-rated munis rose by 3 basis points to 4 bps as Treasuries dipped on stronger stocks, traders said.

The yield on the 30-year Treasury bond climbed by 5 bps, and the 10-year benchmark yield closed the session up 2 bps.

The day’s offerings were headlined by Illinois, which came to market with $480 million of competitive general obligation bonds (/BBB+/BBB+).

BofA Merrill Lynch won the bid at a 3.99% true interest cost, said Catherine Kelly, spokeswoman for the Illinois Governor’s Office.

“The previous rate of the last G.O. competitive bond sale in April 2014 was 4.08%,” Kelly said in an interview Thursday.

“The state received nine bids in today’s competitive bid. The bonds were issued to continue Illinois’ road construction programs, which are essential to maintain public infrastructure, improve public safety and create construction jobs.”

The bonds are due 2017 to 2039 with a term bond due in 2041. The coupons were not immediately available Thursday, but yields range from 1.15% to 4.13%. The 2041 bonds are priced at 105.855 to yield 4.27%.

Proceeds will be used to finance capital expenditures.

Seattle brings debt

Elsewhere, Seattle came to market with $155,045,000 of series 2016 municipal light and power revenue bonds.

The deal included $31.87 million of series 2016A taxable new clean renewable energy bonds and $123,175,000 of series 2016B refunding revenue bonds.

The 2016A bonds are due Jan. 1, 2041, have a 4.05% coupon and priced at 100.403 to yield 4%, and the 2016B bonds are due 2016 to 2029 with 4% to 5% coupon and yields from 0.45% to 2.45%.

The bonds (Aa2/AA/) were sold competitively. Wells Fargo Securities LLC took the 2016A bonds at a 4.05% TIC, and Citigroup Global Markets Inc. won the bid for the 2016B bonds at a 2.071% TIC, said Michael VanDyck, the city’s director of debt financing.

“The City of Seattle has strong credit ratings and is in the market regularly,” VanDyck said in an interview.

“Competitive trading desks are familiar with the credit and always eager to bid. Therefore, the city usually issues bonds competitively because this results in the lowest rates.”

VanDyck said the offering received nine bidders on each of the two tranches.

Proceeds will be used to finance capital improvements to the city’s light system and to refund existing debt.

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