Munis firm slightly as investors return to secondary; Ohio brings $442.77 million G.O. bonds

By Sheri Kasprzak

New York, March 21 - Municipals fared better on Wednesday than they have for the past week, said market insiders. The secondary market received some bids, said one trader reached during the session, after a few days of scant bids.

"There's not a lot trading out there, but we're getting more bids than we have been," he noted.

"Primary is still dominating, but there have been some postponed deals, and some of the week's bigger stuff has already priced, so that's helping bring in some bids on the secondary side."

The intermediate portion of the curve, particularly around 10 years, is still seeing some pressure, said the trader, but bids are still coming in nonetheless.

Meanwhile, the news on state tax revenues is still mixed, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"Preliminary data for 4Q11 indicate an eighth straight quarter of improvement in revenues, but the increase, a 2.7% year-over-year, was the slowest pace in six quarters and well below the average 9% increase of the first three quarters of 2011," Schankel wrote in a report Wednesday.

"Southeastern states saw the largest gains at 12.5%, while far Western state revenues fell 6.3%, with much of the decline the result of expiration of certain California tax increases."

Ohio brings $442.77 million

Heading up primary action, the State of Ohio came to market with $442,765,000 of series 2012 general obligation bonds, said a pricing sheet.

The deal included $300 million of series 2012A higher education G.O. bonds, $102,615,000 of series 2012B higher education G.O. refunding bonds and $40.15 million of series 2012B infrastructure improvement G.O. refunding bonds.

The 2012A higher education bonds are due 2013 to 2032 with 2% to 5% coupons. The 2012B higher education refunding bonds are due 2016 to 2023 with 5% coupons, and the 2012B infrastructure refunding bonds are due 2016 to 2021 with 5% coupons.

"Yields for the larger deal were 2.68% in 10 years, 3.8% in 20 years and 35 and 68 basis points above closing AAA benchmarks," Schankel said of the offering.

J.P. Morgan Securities LLC was the senior manager for the bonds (Aa1/AA+/AA+).

Proceeds will be used to finance capital improvements to state-supported and state-assisted higher education institutions and to refund outstanding bonds for a net present value savings.

Alexandria saves $3.58 million

In other pricing action, the City of Alexandria, Va., brought $63,625,000 of series 2012A G.O. refunding bonds, said a pricing sheet.

The bonds (Aaa/AAA/) were sold competitively with JPMorgan winning the bid, said Laura Triggs, the city's acting chief financial officer. The true interest cost came in at 1.98%, and the net interest cost was 2.17%.

"We saved $3,578,000, or $3,319,000 present value, on debt service costs," said Triggs.

The bonds are due 2013 to 2023 with 2% to 4.5% coupons.

Proceeds will be used to refund the city's series 2004A, 2004C and 2006 G.O. public improvement bonds.

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