Munis up; California Public Works prices; New York Liberty Development to offer $1.63 billion

By Cristal Cody

Tupelo, Miss., Oct. 24 – Municipals improved on Friday after weakening most of the week with yields 3 basis points to 4 bps stronger, an informed source said.

“Munis are a bit stronger today because after going through most of the week a few basis points cheaper, the market has regathered strength,” a source said. “We should be well positioned for a stronger market. We’re expecting yields to fall again next week.”

Treasuries ended mostly unchanged. The 10-year Treasury note yield closed at 2.27%, while the 30-year bond yield ended flat at 3.04%.

In new issuance, the California State Public Works Board priced $249,525,000 of lease revenue bonds in a three-part offering.

The Michigan Finance Authority tapped the market with a $295.35 million offering of revenue bonds for the Detroit Regional Convention Facility.

Looking to deal action in the week ahead, New York Liberty Development Corp. plans to price $1.63 billion of series 2014 3 World Trade Center revenue bonds on Tuesday in a deal that should price well, according to a market source.

“There’s a tremendous demand for non-Puerto Rico and non-tobacco names in muni high yield,” the source said.

The 3 World Trade Center deal includes $1.08 billion of class 1 bonds due Nov. 15, 2044, $300 million of class 2 bonds due Nov. 15, 2041 and $250 million of class 3 bonds due Nov. 15, 2044.

Goldman Sachs & Co. and J.P. Morgan Securities LLC are the senior managers of the negotiated offering.

Proceeds will be used to finance the completion and construction of Tower 3 of the World Trade Center.

About $5.9 billion of municipal bonds are forecast to price in the week ahead, according to a market source.

California sells revenue bonds

The California State Public Works Board priced $249,525,000 of series 2014 lease revenue bonds (A1/A-/A-) in three tranches, downsized from $253.97 million, according to a pricing sheet.

The board sold $108,185,000 of series 2014D Department of Corrections and Rehabilitation bonds due 2015 through 2029 with coupons from 3% to 5% and yields from 0.18% to 2.68%.

The board also priced $76,755,000 of series 2014E various capital purpose bonds with serial maturities from 2017 through 2034 and with coupons from 2% to 5% and yields from 0.65% to 3.29%. The series 2014E bonds include a 5% term bond due Sept. 1, 2039 that priced to yield 3.27% and a 3.5% term bond due Sept. 1, 2039 that priced at par.

In the third tranche, the board sold $64,585,000 of series 2014F Department of Corrections and Rehabilitation Pleasant Valley State Prison bonds due 2015 through 2019 and with coupons from 3% to 5% and yields from 0.18% to 1.2%.

The bonds priced on a negotiated basis with Barclays as the senior manager and Backstrom McCarley Berry & Co. LLC as the co-senior manager.

Proceeds will be used to finance the construction of the San Diego Jail and the Madera Jail, make capital improvements to the Pleasant Valley State Prison and refund existing debt.

Michigan Finance prices

The Michigan Finance Authority sold $295.35 million of series 2014H local government loan program revenue bonds (/AA-/) for the Detroit Regional Convention Facility, according to a pricing sheet.

The deal included $271,825,000 of series 2014H-1 bonds with serial maturities from 2016 through 2034 and a term bond due 2039. The serial bonds priced with 2% to 5% coupons and yields from 0.47% to 3.44%. The term bond priced with a 5% coupon to yield 3.64%.

The authority also priced $23,525,000 of series 2014H-2 bonds with serial maturities from 2016 through 2024 and 2029 and term bonds due 2028 and 2039. The serial bonds priced with coupons that ranged from 0.812% to 4.371% and yields from 0.812% to 4.371%. The 3.882% term bond due 2028 priced to yield 4.071%. The 4.782% term bond due 2039 priced to yield 4.921%.

The bonds were sold on a negotiated basis with J.P. Morgan Securities LLC and Wells Fargo Securities LLC as the senior managers.

Proceeds will be used to refund existing Detroit Regional Convention Facility bonds.

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