Municipals weaken with Treasuries as FOMC ends meeting; Arizona Transportation taps market

By Sheri Kasprzak

New York, Dec. 17 – Municipals closed Wednesday weaker as Treasury yields rose following the Federal Open Market Committee’s December meeting at which Federal Reserve chairwoman Janet Yellen suggested interest rates may rise sooner rather than later.

Yields were higher by 3 basis points to 4 bps, moving in line with Treasuries, traders said Wednesday afternoon.

Meanwhile, the 10-year benchmark Treasury note yield climbed by 7 bps, and the 30-year bond yield rose by 5 bps.

In the primary market, the bulk of the week’s new issues priced, leaving only a few left to price in 2014.

Arizona transportation eyed

Leading the pack of new deals, the Arizona Transportation Board brought to market $377.5 million of series 2015 highway revenue refunding bonds. The offering was cut from $380 million.

The bonds (Aa1/AAA/) were sold through Citigroup Global Markets Inc.

The bonds are due 2015 to 2033 with 2% to 5% coupons and 0.2% to 2.76% yields, according to a pricing sheet.

Proceeds will be used to refund existing highway revenue bonds.

Miami-Dade schools sell debt

Another large offering came from the Miami-Dade County School Board of Florida, which sold $306.82 million of series 2015A certificates of participation. The deal was downsized from $317,285,000.

The COPs (A1/A/) were sold through BofA Merrill Lynch.

The certificates are due 2018 to 2032 with 5% coupons and yields from 1.12% to 3.26%, according to a term sheet.

Proceeds will be used to refund the board’s series 2007A-B COPs.

Gainesville offers bonds

In other news, the City of Gainesville, Ga., sold $83.65 million of series 2014 water and sewerage refunding revenue bonds. This offering was also downsized from $90.98 million.

The bonds (Aa2/AA-/) were sold competitively with Robert W. Baird & Co. Inc. winning the bid at a 2.062263% true interest cost, said Kathy Posey with Public Financial Management Inc., the city’s financial adviser.

The bonds are due 2015 to 2028 with 2% to 5% coupons and 0.3% to 2.5% yields.

“The city is not required to sell debt of this nature competitively,” Posey said in an interview.

“PFM, as the city’s financial adviser, recommended that they sell their bonds competitively given their strong credit ratings of Aa2 from Moody’s and AA- from S&P. Their last bond issue was also sold competitively and was well received in the market in 2012. Those bonds were issued through the Gainesville Redevelopment Authority.”

Proceeds will be used to refund all of the city’s outstanding state revolving fund loans, as well as to refund a portion of its series 2005 revenue bonds.

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