Municipals take a hit despite firmer Treasuries; Maryland brings $736.86 million of G.O. bonds

By Sheri Kasprzak

New York, March 5 - Municipals underperformed Treasuries Wednesday as the bulk of the week's offerings hit the market, insiders said.

Yields jumped by as much as 5 basis points, according to Municipal Markets Advisors, even as Treasuries improved somewhat following the release of the Federal Reserve's Beige Book.

Meanwhile, volume remains light with 30-day visible supply at about $9.4 billion. Among some of that volume will be a $3.5 billion offering of general obligation bonds from the Commonwealth of Puerto Rico. A trader noted that 5% G.O. bonds due 2041 were trading at 7.53% Wednesday and 5.5% G.O. bonds due 2039 were trading at 7.73%.

Maryland brings G.O. debt

Heading up new issue action Wednesday, the State of Maryland brought $736,855,000 of series 2014 state and local facilities loan G.O. bonds.

The offering included $450 million of first series 2014A tax-exempt bonds, $50 million of series 2014B taxable bonds and $236,855,000 of series 2014C tax-exempt refunding bonds, said a pricing sheet.

The 2014A bonds are due 2018 to 2029 with 3% to 5% coupons with 0.71% to 3.23% yields.

The 2014B bonds are due 2017 to 2018 with 0.70% to 1% coupons all priced at par.

The 2014C bonds are due 2014 to 2021 with coupons from 3% to 5%.

BofA, Citi, JPMorgan win

The bonds (Aaa/AAA/AAA) were sold competitively. BofA Merrill Lynch won the bid for the series 2014A bonds at a 2.84% true interest cost, Citigroup Global Markets Inc. won the 2014B bonds at a 0.91% TIC, and J.P. Morgan Securities LLC took the series 2014C bonds at a 1.24% TIC.

Proceeds will be used to finance a variety of state capital projects, including school and highway projects, as well as loans to state and local governmental facilities.

The tax-exempt refunding bonds will save Maryland taxpayers $12.6 million in debt service costs, Maryland treasurer Nancy Kopp said in a statement.

New York debt prices

Elsewhere during the session, another major offering hit the market. The City of New York sold $650 million of series 2014I-1 G.O. bonds.

The bonds were sold through lead manager Citigroup.

The bonds are due 2016 to 2036 with a term bond due in 2039 with coupons from 2% to 5%, said a pricing sheet. The 2039 bonds have a 4% coupon priced at 94.703.

During the two-day retail order period, yields were adjusted lower on the bonds by as much as 5 bps.

Proceeds will be used to finance capital projects.

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