Short to intermediate municipal bonds weaken; New York City brings $470 million of G.O. bonds

By Sheri Kasprzak

New York, March 20 - Municipals inside of 20 years weakened as secondary activity dried up, traders said.

"Everyone's out for new issues, and there's very little going on in secondary," said one trader reached during the afternoon.

"Bids are very hard to get, and what's coming in is definitely cheap, particularly on the shorter end."

Meanwhile, municipals continue to outperform Treasuries, said Alan Schankel.

"A combination of continuing strong demand, fueled by the recent jump in rates, should accommodate absorption of this week's $9 billion new-issue slate," Schankel said in a report released Tuesday.

"After strong January and February redemption flows, $16 billion and $19 billion respectively (excluding notes and current refundings), the pace slows in March to $13 billion, leading into a $10 billion April, the slowest month of the year. Despite the slowing of reinvestment funds, a combination of light new money issuance and continuing positive mutual fund inflows provides favorable technical underpinnings for municipals."

New York sells G.O. debt

Heading up the day's primary action, the City of New York brought to market $470 million of series 2012G general obligation bonds, said a term sheet.

The offering included $370 million of series 2012G-1 tax-exempt bonds and $100 million of series 2012G-2 taxable bonds.

The 2012G-1 bonds are due 2014 to 2029 with 5% coupons. The 2012G-2 bonds are due 2014 to 2020 with 0.55% to 2.65% coupons.

Yields ranged from 0.62% to 3.4%, said a statement from the city's Bureau of Public Finance.

The bonds (Aa2//AA) were sold competitively. Wells Fargo Securities LLC won the 2012G-1 bonds, and J.P. Morgan Securities LLC won the 2012G-2 bonds.

Proceeds will be used to finance capital projects.

"As part of a common plan of financing, the city will also be pricing $760 million variable-rate demand bonds on or about the closing of the combined transaction on April 5," the bureau's statement said.

Howard County prices

Also during the day, Howard County, Md., priced $57.34 million of series 2012 G.O. bonds, said a pricing sheet.

The bonds (Aaa/AAA/AAA) were sold competitively. Citigroup Global Markets Inc. won the bid with a 3.308224% true interest cost, said Nikki Hogue, debt manager for the county.

The deal includes $37.37 million of series 2012A consolidated public improvement bonds and $19.97 million of series 2012A metropolitan district bonds.

The 2012A consolidated public improvement bonds are due 2013 to 2032 with 2% to 4% coupons. The 2012A metropolitan district bonds are due 2013 to 2029 with term bonds due in 2032 and 2037. The serial coupons range from 3% to 4%. The 2032 bonds have a 4% coupon and priced at 104.187. The 2037 bonds have a 4% coupon and priced at par.

"The county is not required to sell its debt competitively but historically only sells on a negotiated basis if conditions warrant it," Hogue said in an interview Tuesday.

Proceeds will be used to pay or reimburse the county for the payment of costs related to some projects.

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