Municipals decline but outperform Treasuries; Chicago prices $270.96 million revenue bonds

By Sheri Kasprzak

New York, Sept. 6 - Municipal yields were softer on Thursday but still managed to outperform Treasuries, traders reported.

Yields were off 3 basis points to 5 bps. Ten-year Treasury yields were higher by about 8 bps, and 30-year Treasuries were off by 9 bps.

"We're seeing wider bid/asks, which is shoving us down somewhat," a trader said.

New issues were getting bumped lower in repricings, the trader noted.

Chicago sells debt

Heading up the day's light primary action, the City of Chicago came to market with $270.96 million of series 2012 senior-lien wastewater transmission revenue bonds, said a pricing sheet.

The bonds (/A+/AA) were sold through Ramirez & Co. Inc.

The bonds are due 2014 to 2034 with a term bond due in 2042. The serial coupons range from 3% to 5%. The 2042 bonds have a 4% coupon and priced at par.

Proceeds will be used to finance capital improvements and extensions to the sewer system.

Florida BOE drew interest

The $229.93 million deal the Florida Board of Education sold on Wednesday was offered amid light supply, drawing a lot of interest, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

The board priced $229.93 million of series 2012D public education capital outlay refunding bonds, which are due 2014 to 2033 with 3% to 5% coupons.

"The muni market welcomed a competitive $229 million issue of Florida Board of Ed amidst otherwise meager supply, with yields of 1.93% in 10 years and 2.55% in 15 years," Schankel said.

"MMA noted that the 10-year maturity yield was 14 basis points above their MMA benchmark AAA yield, a basis point wider than Florida BOE's June sale, while the 15-year yield came in 24 basis points over the benchmark, an improvement compared to June's 30 basis point spread."

The bonds (Aa1//AAA) were sold competitively with Citigroup Global Markets Inc. winning the bid.

Proceeds will be used to refund existing PECO bonds for a debt service savings.

Ohio COPs price

In other news, the Ohio Department of Administrative Services priced $56,235,000 of series 2012 certificates of participation, said a pricing sheet.

The COPs (Aa2/AA/) were sold competitively with Guggenheim Securities winning the bid with a 2.585% true interest cost, said Larry Scurlock, debt manager for the state. Scurlock said the cover bid for the offering was 2.591%, a difference of just 1 bp from the best bid. RBC Capital Markets LLC made the cover bid.

The COPs are due 2013 to 2027 with 2% to 5% coupons.

"Supply is down, so it was great for the state," Scurlock said Thursday.

"Usually a shortened week doesn't really help you, but this time, it's a lack of supply."

The state typically does a mix of competitive and negotiated offerings, and Thursday's sale was done competitively to balance it out and to gauge where the bonds will trade in the secondary market, Scurlock said.

"We have a very stable name in the capital markets," Scurlock said of the state.

"It provides a nice benchmark for where your bonds trade in the marketplace. Two factors were trying to balance it out, and we wanted to get a good gauge of where these bonds will trade in secondary."

There were 11 bids for the deal, including bids from a number of investors that had never bid on deals from the department, Scurlock said, including the winning bidder, Guggenheim.

Proceeds will be used to finance upgrades to the Multi-Agency Radio Communications System.

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