Municipals lose ground as Treasuries weaken; New York City water brings $347.21 million

By Sheri Kasprzak

New York, June 18 - Municipal yields were off a touch on Tuesday as Treasuries weakened, market sources said.

"I think it's reactionary to Treasuries," said a trader during the afternoon.

Secondary selling pressure was also a factor, another trader noted. Bid-wanteds were reportedly high again, said the trader.

Meanwhile, one of the larger offerings of the week hit the market, but it was downsized. The New York City Municipal Water Finance Authority sold $347.21 million of series 2013EE water and sewer system second general resolution revenue bonds.

Retail took $260 million

Of the offering, retail investors took $260 million, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

During the retail order period, the 30-year bonds were structured with a 5% coupon to yield 4.18% to the 2023 call, Schankel noted.

The bonds (Aa2/AA+/AA+) were sold through Citigroup Global Markets Inc.

The bonds are due 2028, 2035 and 2047. The 2028 bonds have a 5% coupon priced at 113.609. The 2035 bonds have a 4.125% coupon priced at 99.071 and a 5% coupon priced at 109.096. The 2047 bonds have a 4.25% coupon priced at 97.366 and a 5% coupon priced at 106.04.

Proceeds will be used to finance capital improvements to the city's water and sewer system, as well as to retire commercial paper notes.

New Mexico offers debt

Elsewhere during the session, the State of New Mexico came to market with $157.56 million of series 2013A severance tax bonds, said a pricing sheet. The offering was downsized from $220 million.

The bonds (Aa1/AA/) were sold competitively. Wells Fargo Bank, NA won the bid at a 2.33% true interest cost, said Stephanie Schardin Clarke, the state Board of Finance director.

The bonds are due 2014 to 2023 with 4% to 5% coupons.

"The sizing was downsized due to receiving a premium as well as [the] determination that some capital projects were not eligible for funding at this time," said Clarke Tuesday after the offering priced.

"We do always sell these bonds competitively as a policy."

Proceeds will be used to finance capital improvements within the state.

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