Municipals close mixed amid light trading, heavy primary action; New York brings upsized G.O.s

By Sheri Kasprzak

New York, June 11 – Municipals traded mixed on the session amid light secondary action as the market focused entirely on a heavy slate of new issues, traders said.

Yields were slightly moved in both directions, with longer bonds seeing some weakness and shorter bond yields edging down a touch, said one trader.

“There’s a fair amount of pressure from the new deals, the results of which have been mixed,” said the trader.

“We’re also feeling some of the pressure from Treasuries today.”

A large number of the week’s new issues hit the market Wednesday, dominating the activity. Treasuries, meanwhile, ended mostly weaker following another lackluster auction.

New York G.O.s price

Heading up the day’s primary action, the City of New York priced one of many upsized offerings – its $1,020,660,000 of series 2014 general obligation bonds. The offering was increased from $850 million.

The deal included $918.49 million of series 2014J bonds and $102.17 million of series 2014K bonds, said a pricing sheet.

The 2014J bonds are due 2015 to 2034 with 2% to 5% coupons. The 2014K bonds are due 2014 to 2022 with 2% to 5% coupons.

The bonds (Aa2/AA/AA) were sold through Morgan Stanley & Co. LLC.

Proceeds will be used to refund outstanding G.O. debt.

Santee Cooper brings debt

Another offering that upsized came from the South Carolina Public Services Authority, or Santee Cooper, which priced $642.27 million of series 2014 revenue obligations. The deal was upsized from $400 million.

The offering included $600 million of series 2014A obligations and $42.27 million of series 2014B refunding obligations.

The 2014A obligations are due 2049 and 2054. The 2049 bonds have a 2.5% coupon priced at par and a 5% coupon priced at 105.012. The 2054 bonds have a 5.5% coupon priced at 108.408.

The 2014B obligations are due 2031 to 2034 with a term bond due in 2038. The serial bonds have 5% coupons, and the 2038 bonds have a 5% coupon priced at 107.677.

Proceeds will be used to finance capital improvements to the Virgil C. Summer Nuclear Generating Station Units 2 and 3 as part of a capital program, as well as to refund existing debt.

L.A. MTA sells bonds

Amid the other deals, the Los Angeles County Metropolitan Transportation Authority offered up $60.5 million of series 2014A tax and revenue anticipation notes.

The notes (/AA+/AA) were sold competitively. BofA Merrill Lynch won the bid at a 3.76% true interest cost, said Rick Jager, spokesman for the authority.

The notes are due 2027 to 2034 with 5% coupons and yields from 2.74% to 3.26%, according to a pricing sheet.

“We are not required to sell debt competitively,” Jager said in an interview Wednesday.

“The decision to use a competitive sale was based on market conditions, our credit strength and our strong name recognition as a municipal issuer.”

Proceeds will be used to refund the authority’s series 2004A senior revenue bonds.

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