Municipals post gains as Treasuries rally, stocks slide; Dasny upsizes bonds to $1.06 billion

By Sheri Kasprzak

New York, Oct. 15 – Municipals extended their gains into a second day, following along with but underperforming rallying Treasuries amid global economic worries and sinking stocks, traders reported.

Yields on munis were lower by 3 basis points to 5 bps, said a trader in the afternoon.

Meanwhile, the 10-year benchmark Treasury note yield finished the day lower by 6 bps at 2.15% after dropping below 2% during the session. The 30-year bond yield fell by 3 bps to 2.92%, and the five-year note yield fell 8 bps to 1.37%.

Extremely solid secondary activity has also been pushing the market, a trader said, with many offerings trading higher. Primary also garnered strong interest and saw two of the week’s largest deals upsized.

Dasny brings revenue bonds

Headlining the day’s primary action, the Dormitory Authority of the State of New York came to market with $1,059,820,000 of series 2014 state sales tax revenue bonds. The offering was upsized from $1 billion.

The deal included $1,044,510,000 of series 2014A tax-exempt bonds and $15.31 million of series 2014B taxable bonds.

The 2014A bonds are due 2016 to 2039 with a term bond due in 2044. The serial coupons range from 3% to 5%.

The 2014B bonds are due March 15, 2016, have a 0.33% coupon and priced at par.

The bonds (Aa1/AAA/) were sold through BofA Merrill Lynch, Jefferies & Co. and Ramirez & Co. Inc.

Proceeds will be used to finance capital improvements at the City University of New York; road, highway, parkway and bridge improvements under the state’s Dedicated Highway and Bridge Trust Fund program; state grants for libraries; and the construction of a state court officer’s training facility in Brooklyn.

Washington upsizes offering

Another upsized deal for the day came from the State of Washington, which priced $894,175,000 of series 2015 general obligation refunding bonds, up from $764.66 million.

The deal included $592.42 million of series R-2015C various purpose G.O. bonds and $301,755,000 of series R-2015D motor vehicle fuel tax G.O. bonds.

The 2015C bonds are due 2015 to 2024 and 2027 to 2032 with 4% to 5% coupons and 0.08% to 2.52% yields.

The 2015D bonds are due 2015 to 2032 with 1% to 5% coupons and yields from 0.08% to 2.49%.

The bonds (Aa1/AA+/AA+) were sold competitively.

Proceeds will be used to refund the state’s series 2005A, 2007C, 2007F, 2008A and 2008C various purpose G.O. bonds and its series R-2005B, 2007D, 2008B and 2008D motor vehicle fuel tax G.O. bonds.

N.J. school bonds trade

Moving to secondary market action, heavy trading activity was seen for the 4.2% 2040 bonds from the New Jersey Economic Development Authority’s series 2014UU school construction bonds.

The bonds were trading at 3.825% during the session Wednesday after pricing on Oct. 7 at 4.23%.

Also trading better were the 4% 2044s from the State of Ohio’s bonds issued for University Hospitals Health System. The bonds were seen trading at 3.756% Wednesday evening after pricing at 4.10% last week.

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