Municipals flat to firmer; Ohio State University prices upsized $500 million century bonds

By Sheri Kasprzak

New York, Oct. 20 - Municipals were mostly flat on Thursday as the primary supply tapered off slightly, said market insiders.

The most improvement in the market was seen at 20 years, where yields were down by almost 4 basis points. The rest of the yield curve was slightly firmer to flat.

Meanwhile, municipals-to-Treasuries ratios have returned closer to historical norms since the financial crisis started, said Alan Schankel, managing director with Janney Montgomery Scott LLC, but they have been rising recently and are at the highest level since January of 2009.

Schankel said there are a few reasons for this, including the recent flood of new offerings.

"After a slow start to the year, the new issue pace is accelerating," Schankel wrote in a report.

"The number of new money loans is moderate, but low interest rates have increased the number of refunding deals, which accounted for about 50% of September's calendar."

The flat demand has also been a factor.

"Municipal mutual fund flows have been positive since the end of August but are still modest compared to the pace experienced during the same period last year," he wrote.

Schankel wrote that money available from maturing called bonds, which averaged about $26 billion a month in the summer, will be roughly $14 billion per month on average from September to November.

Ohio brings bonds

Leading the day's pricing action was Ohio State University, which sold $500 million of 100-year series 2011A taxable general receipts bonds, according to a pricing sheet. The century bonds were upsized from $300 million.

The bonds (Aa1/AA/AA) were sold through Barclays Capital Inc. and Goldman Sachs & Co.

The bonds are due June 1, 2111 and have a 4.8% coupon priced at 98.993.

Proceeds will be used to expand the Ohio State University Medical Center and to fund roads, grounds, student life facilities, utilities and other campus infrastructure.

Rhode Island sells TANs

Also during the session, the State of Rhode Island priced $200 million of series 2012 G.O. tax anticipation notes, according to a pricing sheet

The notes were sold through senior manager Morgan Keegan & Co. Inc.

The notes are due June 29, 2012 and have a 2% coupon. The full pricing details were not available by press time Thursday.

Proceeds will be used to finance capital requirements ahead of the collection of taxes.

New Hampshire prices G.O.s

In other primary activity, the State of New Hampshire sold $100 million of series 2011B G.O. capital improvement bonds, according to a pricing sheet.

The bonds were sold competitively. Calls to the issuer for the winning bidder were not returned by press time Thursday evening.

The bonds are due 2013 to 2031 with 3% to 5% coupons.

Proceeds will be used to fund capital projects.

California preps offering

Coming up, the State of California plans to price $450 million of series 2011 economic recovery refunding bonds, according to a preliminary official statement.

The bonds (Aa3/A+/A+) will be sold on a negotiated basis with Barclays Capital and Wells Fargo Securities LLC as the senior managers.

Proceeds will be used to refund the state's series 2004A and 2004C economic recovery bonds.

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