Munis firm in spots; new issues improve in secondary; Pennsylvania authority sells $2.5 billion

By Sheri Kasprzak

New York, Oct. 3 - Municipal yields were better in spots Wednesday.

"There's some firmness sparked mostly by recent deals improving in secondary," said a trader reached in the afternoon.

"Around 10 years remains strong. Elsewhere, it's pretty flat, but there's some positive movement out there because of the flood of recently priced stuff hitting secondary."

The recent flood of activity includes several weeks of volume in excess of $8 billion after a supply drought in the late summer.

"Demand is still strong, but we feel that might be changing a bit," said another trader.

"New issues are still being absorbed well, but it might just be a matter of time before the supply pressure mounts. It's a wait-and-see situation."

Pennsylvania authority prices

The Pennsylvania Economic Development Finance Authority priced $2,527,405,000 of series 2012 unemployment compensation revenue bonds, said a pricing sheet.

The deal included $1,430,435,000 of series 2012A bonds and $1,096,970,000 of series 2012B bonds.

The 2012A bonds are due 2013 to 2019 with 1% to 5% coupons. The 2012B bonds are due 2020 to 2023 with 5% coupons.

The bonds (Aaa/AA+/AA+) were sold on a negotiated basis. Citigroup Global Markets Inc. was the senior manager for the 2012A bonds, and Bank of America Merrill Lynch was the lead manager for the 2012B bonds.

Proceeds will be used to repay federal loans related to the commonwealth's unemployment compensation system.

New York brings G.O. bonds

In other major primary offerings, the City of New York substantially upsized its offering of general obligation bonds. The city sold $1,125,000,000 of series 2013 G.O. bonds, upsized from $825 million.

The deal included $525 million of series 2013A-1 tax-exempt bonds, $457.99 million of series 2013B tax-exempt bonds and $142.01 million of series 2013C tax-exempt bonds.

The bonds were sold through J.P. Morgan Securities LLC.

The 2013A-1 bonds are due 2014 to 2035 with 3% to 5% coupons. The 2013B bonds are due 2014 to 2032 with coupons from 3% to 5%. The 2013C bonds are due 2013 to 2033 with 2% to 5% coupons.

Yields on the offering were adjusted downward by 1 to 3 basis points from Monday's initial retail order period, said Alan Schankel, managing director with Janney Montgomery Scott LLC. The city conducted a second retail order period for the offering on Tuesday.

Proceeds will be used to finance some of the city's capital needs under its 2012 to 2016 financial plan.

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