Municipals rally after stocks take a dive; Indiana Finance sells $1.04 billion revenue bonds

By Sheri Kasprzak

New York, Aug. 18 - Municipals rallied on Thursday as the U.S. stock markets plunged, said market insiders. Yields were seen better by 4 basis points to 9 bps across the curve, with intermediate bonds the most improved, said one trader.

Fifteen-year yields were down 9 bps on Thursday and 10-year yields were down almost 7 bps. Twenty-year yields were down 6 bps, and seven-year yields were down 4 bps.

Comparatively, 10-year Treasury yields were down more than 10 bps and seven-year notes were down almost 7 bps.

"Treasuries are helping," said one trader.

"Stocks were just slammed," the trader said. "We're seeing some benefit from that. But it's also pricing. We've had a few really big deals this week that drew in retail, and the pricing has come out pretty well. It's a combination of things."

The Dow Jones Industrial Average fell 419.63 points, or 3.68%, to 10,990.58 on Thursday. The Nasdaq fell by 5.22%, and the Standard & Poor's 500 dropped by 4.46%.

Indiana Finance sells bonds

Heading up the active pricing session for Thursday, the Indiana Finance Authority priced $1,035,390,000 of series 2011 revenue bonds, according to a pricing sheet.

The offering included $678.48 million of series 2011A first-lien bonds (A1/AA/), $268.015 million of series 2011B second-lien bonds (A2/A/), $42.905 million of series 2011B Citizens Energy second-lien bonds (A2/A/) and $45.99 million of series 2011C second-lien bonds (A2/A/).

The bonds were sold through senior manager Morgan Stanley & Co. Inc.

The 2011A bonds are due 2012 to 2026 with term bonds due in 2031, 2038 and 2041. The serial coupons range from 2% to 5.25%. The 2031 bonds have a 5.25% coupon priced at 105.033, and the 2038 bonds have a 5.25% coupon priced at 103.32. The 2041 bonds have a 5% coupon priced at 100.388.

The 2011B second-lien bonds are due 2014 to 2026 with term bonds due in 2031 and 2041. The serial coupons range from 5% to 5.25%. The 2031 bonds have a 5.25% coupon priced at 103.239, and the 2041 bonds have a 5% coupon priced at 98.163.

The 2011B Citizens Energy bonds are due 2014 and have a 3% coupon priced at 104.213.

The 2011C bonds are due 2016 and have a 3% coupon priced at 105.07.

Proceeds will be used to acquire a wastewater system from Citizens Energy Group, as well as to make upgrades to the wastewater system.

New Hampshire floaters price

Elsewhere during the day, the New Hampshire Higher Education Loan Corp. came to market with $522.635 million of series 2011-1 taxable student loan-backed Libor floating-rate notes, according to a pricing sheet.

The offering included $213 million of series 2011-1-A1 notes, $127 million of series 2011-1-A2 notes and $182.635 million of series 2011-1-A3 notes.

The 2011-1-A1 notes are due Oct. 25, 2021 and bear interest at three-month Libor priced at 99.617. The 2011-1-A2 notes are due Oct. 25, 2025 and bear interest at three-month Libor priced at 97.492, and the 2011-1-A3 notes are due Oct. 25, 2037 and bear interest at three-month Libor priced at 92.242.

The bonds (/AAA/AAA) were sold through senior manager RBC Capital Markets LLC and UBS Investment Bank.

Proceeds will be used to finance student loans, as well as to redeem existing notes.

Utility bonds sold

Also in the primary market, the Southern California Public Power Authority sold $157.465 million of series 2011-1 revenue bonds for the Milford Wind Corridor Phase II project, according to a pricing sheet.

The bonds (/AA-/AA-) were sold through senior manager Barclays Capital Inc.

The bonds are due 2012 to 2031 with 2% to 5.25% coupons.

Proceeds will be used to finance the prepayment for electricity supply from the wind-powered electric facility near Milford, Utah.

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