Municipals rally again as Treasuries improve; Metropolitan Transportation, N.Y., brings debt

By Sheri Kasprzak

New York, Jan. 15 – Municipals rallied for the second straight session, with yields down 4 to 6 basis points, traders reported late in the day.

Yields followed in line with Treasuries as the remainder of the week’s offerings priced. The new deals were led by an $850 million upsized offering from the Metropolitan Transportation Authority of New York.

Meanwhile, Treasuries rallied after the Swiss central bank lowered its policy rate by 50 bps. The 30-year Treasury bond yield fell by 7 bps to a record low of 2.40%. The 10-year Treasury note yield fell by 9 bps, and the five-year note yield fell by 11 bps.

MTA upsizes deal

Heading up the day’s primary action, the Metropolitan Transportation Authority of New York sold $850 million of series 2015A transportation revenue bonds, upsizing the deal from $500 million.

The bonds were sold through senior managers J.P. Morgan Securities LLC and Williams Capital Group LP.

The deal included $600 million of series 2015A-1 bonds and $250 million of series 2015A-2 Sifma index floating-rate tender notes.

The 2015A-1 bonds are due 2015 to 2037 with term bonds due in 2040 and 2045. The serial coupons range from 1% to 5%. The 2040 bonds have a 5% coupon and priced at 117.916, and the 2045 bonds have a 5% coupon and priced at 117.237.

The 2015A-2 bonds are due Nov. 15, 2039, but the full terms were unavailable Thursday.

Proceeds will be used to finance various commuter and transit projects.

Rush U Medical bonds price

In other primary activity, the Illinois Finance Authority sold $399,375,000 of series 2015 revenue bonds for the Rush University Medical Center. The deal was downsized from $501.91 million.

The bonds (//A+) were sold through Goldman Sachs & Co. and BofA Merrill Lynch.

The bonds are due 2015 to 2034 with term bonds due in 2038 and 2039. The serial coupons range from 1% to 5%. The 2038 bonds have a 5% coupon and priced at 116.394, and the 2039 bonds have a 4% coupon and priced at 102.882.

Proceeds will be used to refund the medical center’s series 2006 and 2009A-D revenue bonds.

New York TFA yields lower

Elsewhere, the New York City Transitional Finance Authority’s $750 million of building aid revenue bonds saw some yields cut by 15 bps from the initial retail order period’s levels, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

The deal priced Wednesday, and the bonds are due 2016 to 2037 with term bonds due in 2040, 2043 and 2044. The serial coupons range from 3% to 5%. The 2040 bonds have a 5% coupon and priced at 118.18. The 2043 bonds have a 5% coupon and priced at 117.8, and the 2044 bonds have a 4% coupon and priced at 106.348.

The issue “finalized pricing with five- and six-year yields ending 15 bps lower than Monday’s initial retail pricing,” Schankel wrote Thursday.

“On the long end, the 2040 and 2043 maturities, with 5% coupons, saw downward yield adjustments of 7 bps from Wednesday morning, ending 2.89% and 2.93%, respectively.”

The bonds were sold through senior managers Ramirez & Co. Inc. and Goldman Sachs.

Proceeds will be used to finance some authority building expenditures as part of its five-year capital plan.

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