Municipals close weaker as new issues flounder; San Diego County Water brings $289.78 million

By Sheri Kasprzak

New York, Feb. 13 - Muni yields weakened on Wednesday as new offerings failed to get the strong reception they've recently enjoyed, market insiders reported.

"New issues are really kind of floundering," said one trader.

"Yields are getting adjusted down, and it's not just new issues either. It's secondary as well. It's a cheaper tone overall."

In fact, a few offerings were downsized during the session, including an offering from the Maryland Department of Transportation. The department sold $165 million of series 2013 consolidated transportation bonds, dropped from $180 million.

The bonds (Aa1//AA+) are due 2016 to 2028 with 2% to 5% coupons, and proceeds will be used to finance transportation capital projects for the department.

San Diego water bonds price

Among the new offerings priced Wednesday, the San Diego County Water Authority sold $289,775,000 of series 2013A water revenue refunding bonds, said a pricing sheet.

The bonds (Aa2/AA+/AA+) were sold through J.P. Morgan Securities LLC.

The bonds are due 2019 to 2034 with 3% to 5% coupons.

Proceeds will be used to prepay the authority's series 2004A certificates.

NCSU Raleigh yields cut

Meanwhile, yields on some recently priced offerings were adjusted downward, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

In particular, yields on the recently priced $141,655,000 sale of series 2013B taxable general revenue bonds for the North Carolina State University at Raleigh were seen lower Wednesday after pricing Tuesday, said Schankel.

The bonds (Aa1/AA/) were sold through Wells Fargo Securities LLC.

The bonds are due 2013 to 2025 with term bonds due in 2033 and 2041. The serial coupons range from 0.27% to 2.87%. The 2033 bonds have a 3.83% coupon, and the 2041 bonds have a 4% coupon. All of the bonds priced at par.

Proceeds will be used to construct, equip and acquire a campus housing facility as well as to refund the university's series 2005A revenue bonds.

Moody's lifts Boston U

Moving to ratings news, Boston University bucked the recent trend of universities when it was upgraded by Moody's Investors Service to A1 from A2.

"Moody's cites sustained improvement in overall market, academic and research reputation as well as growing philanthropy," Schankel said Wednesday.

"Solid financial performance includes 6.3% operating margins and 3.8x debt service coverage over the past three years."

In other news out of New England, Providence, R.I., was affirmed with a negative outlook.

"While recognizing the challenges of significantly underfunded pensions (32%) and a backdrop of high unemployment and low income levels, Moody's noted a strong institutional presence with entities such as Brown University increasing payments in lieu of taxes in support of the city," Schankel said.

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