Muni yields jump 3-5 bps; Puerto Rico Sales Tax Financing sells $1.8 billion in upsized sale

By Sheri Kasprzak

New York, Jan. 27 - Municipals were seen quite a bit weaker on Wednesday following a recent trend of weakness seen throughout the week, market insiders said.

"We're taking a beating," said one trader reached in the afternoon.

"Long end is probably off by about 3 to 4 basis points, maybe 5 out around 40 [years]. The short end is a little weaker, but not nearly as much."

Treasuries couldn't even be blamed for muni weakness, the trader noted.

Meanwhile, the market turned its attention to an upsized $1.8 billion sale of revenue bonds from the Puerto Rico Sales Tax Financing Corp. The corporation priced series 2010A first subordinate sales tax revenue bonds (A2/A+/A), said a pricing sheet and a sellsider familiar with the sale. The offering was upped from its planned $1.4 billion size.

Overall, a sellsider following the deal said, pricing came in at expected levels.

"For any other issuer, yeah, it might look a little cheap, but it's a Puerto Rico [based] issuer, so it's really not that surprising. Clearly, they managed to get a lot of interest. They were able to upsize. It doesn't look like institutionally really balked that much. Retail wasn't involved as much, but we see that a lot with Puerto Rico bonds."

Subordinated bonds due 2016 to 2027 with term bonds due 2030, 2030, 2037, 2039, 2040 and 2042 priced. The serials to 2026 have 3.375% to 5% coupons, all priced at par. The 2027 bonds have a 5% coupon priced at 99.079. The 2030 bonds have a 5.25% coupon priced at 99.131, the other 2030 bonds have a 5.625% coupon priced at 102.722, and the 2037 bonds have a 5.5% coupon priced at par. The 2039 bonds have a 5.375% coupon priced at 96.909, the 2040 bonds have a 5% coupon priced at 97.704, and the 2042 bonds have a 5.5% coupon priced at 97.778.

The deal also included convertible capital appreciation bonds due 2029 and 2033 with 6.125% and 6.25% coupons, respectively, both priced at par.

Additionally, the offering included capital appreciation bonds due 2031 to 2036 with 6.65% to 6.77% coupons, all priced at par.

Citigroup Global Markets Inc. and Bank of America Merrill Lynch were the senior managers.

Proceeds will be used to fund capital projects.

Missouri education bonds price

Elsewhere in primary action, the Higher Education Loan Authority of the State of Missouri sold Tuesday $761.4 million in series 2010-1 student loan asset-backed Libor floating-rate notes, said a term sheet. The offering was downsized from the planned $1.078 billion.

The notes (/AAA/AAA) were sold through Bank of America Merrill Lynch and Morgan Stanley & Co. Inc.

The bonds are due Nov. 26, 2032 and priced at Libor plus 95 bps at par.

Proceeds will be used to fund student loans throughout the state.

Kansas development bonds price

In other primary activity, the Kansas Development Finance Authority sold Wednesday $52.755 million in series 2010C revenue bonds, said a term sheet.

The bonds (A1/AA/) were sold on a competitive basis with Jefferies & Co. as the winning bidder. The true interest cost came in at 2.934331%.

The bonds are due 2012 to 2020 with 5% coupons across the board.

Proceeds will be used to fund projects under the Kansas Investments in Major Projects and Comprehensive Training program.

Miami-Dade County sells

In other competitive sales, Miami-Dade County in Florida sold Wednesday $50.98 million in series 2010A general obligation Building Better Communities Program bonds, said a term sheet.

The bonds (Aa3) were sold competitively with Morgan Stanley as the winning bidder. The TIC came in at 4.574307%. Public Financial Management Inc. was the financial adviser.

The bonds are due 2010 to 2030 with term bonds due 2033, 2036 and 2039. The coupons range from 2.25% to 4.75%.

Proceeds will be used to fund the construction of a baseball stadium for use by the Florida Marlins baseball team.

U of Michigan sale ahead

In upcoming sales, the Regents of the University of Michigan plans to sell $190.53 million in series 2010C general revenue bonds on Feb. 9, said a notice of sale.

The bonds (Aaa/AAA/) will be sold competitively.

The bonds are due 2011 to 2027.

Proceeds will be used to fund general expenses as well as refund existing debt.

The issuer is based in Ann Arbor, Mich.

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