Munis gain, especially lower-rated names; Ohio offers $400 million G.O. debt in two tranches

By Sheri Kasprzak

New York, Sept. 19 - Municipal yields were improved on Thursday despite the fact that Treasuries sank on economic data, insiders said.

Yields fell by 3 basis points to 5 bps across the curve, said a trader, with the 10-year portion of the curve improving the most.

The 10-year Treasury yield climbed 5 bps.

Lower-rated muni names were seen outperforming high-grade debt, said one market source, with paper from Puerto Rico and tobacco names making gains.

"Investors are out for yield," a trader said during the session.

"There's definitely yield to be had in those names."

30-day supply at $4.1 billion

Looking ahead, next week's new-issue calendar will be extremely light, said Alan Schankel, managing director with Janney Montgomery Scott LLC. The 30-day visible supply is about $4.1 billion, the lowest amount of the year.

Additionally, secondary supply continues to face pressure with mutual fund outflows totaling $2.7 billion for the week ended Sept. 11, bringing total redemptions to $34.3 billion for the year so far.

Ohio G.O. bonds price

Heading up the lighter primary activity on Thursday, the State of Ohio brought to market $400 million of series 2013B general obligation bonds, said a pricing sheet.

The deal included $300 million of series 2013B tax-exempt common schools G.O. bonds and $100 million of series 2013B taxable Third Frontier Research and Development G.O. bonds.

The common schools bonds are due 2014 to 2033 with 1% to 5% coupons and 0.18% to 4.50% yields.

The Third Frontier bonds are due 2014 to 2023 with coupons from 0.28% to 3.69%. They all priced at par.

The bonds (Aa1/AA+/AA+) were sold competitively, but the issuer did not return calls for the winning bidder Thursday.

Proceeds will be used to finance capital facilities for common schools within the state and to fund research and development projects.

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