Municipals end firmer even as Treasuries close mixed; New Orleans brings two offerings in week

By Sheri Kasprzak

New York, June 19 – Municipals retained a firmer tone on Thursday as demand remained strong for new issues that have been hitting the market amid lower supply, market insider said.

Muni yields were lower by 2 basis points to 3 bps across the curve, said one trader.

Treasuries, meanwhile, closed mixed with the yield curve steepening after positive data sent long bond yields higher. The 30-year Treasury bond yield rose by 4 bps, the five-year note yield fell by 3 bps, and the 10-year note yield edged slightly higher.

Municipal inflows remain strong, with $527 million of assets added in the week ended June 11, the 22nd consecutive week of inflows, according to the Investment Co. Institute.

Moving to the secondary market, block trades of Puerto Rico’s 8% general obligation bonds due 2035 originally sold in March printed average yields of 9.44% on Wednesday, up from a 9.15% average in late May and the 8.73% initial level, said a market insider.

New Orleans brings two

Heading to new issues, the City of New Orleans hit the market during the week with not one but two deals.

The city sold $103,525,000 of series 2014 water revenue and refunding bonds on Thursday.

The bonds (/BBB+/BBB) were sold through Goldman Sachs & Co., BofA Merrill Lynch and Morgan Stanley & Co. LLC.

The bonds are due 2016 to 2029 with term bonds due in 2034 and 2044, said a pricing sheet. The serial bonds have 5% coupons and yields from 1% to 4.02%. The 2034 bonds have a 5% coupon and priced at 106.254 to yield 4.25%, and the 2044 bonds have a 5% coupon and priced at 104.71 to yield 4.43%.

Proceeds will be used to finance the expansion and improvement of the city’s water system and to refund existing debt.

Sewer bonds price

On Wednesday, the city offered $158.99 million of series 2014 sewerage service revenue and refunding bonds.

The bonds (/A/BBB) were sold through BofA Merrill Lynch, Goldman Sachs and Morgan Stanley.

The bonds are due 2015 to 2029 with term bonds due in 2034 and 2044, according to the pricing sheet.

The serial coupons range from 2% to 5% with 0.43% to 3.92% yields. The 2034 bonds have a 4.25% coupon and priced at 99.332 to yield 4.30%, and the 2044 bonds have a 5% coupon and priced at 105.598 to yield 4.30%.

Proceeds will be used to expand, improve, construct and equip the city’s sewerage system and to refund existing sewerage debt.

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