Municipals end session mixed as Treasuries take a dive; Omaha Public Power brings revenue debt

By Sheri Kasprzak

New York, July 24 – Municipals rounded out the day mixed with intermediate and long bonds experiencing some weakness thanks to a decline in the Treasuries market, market sources said.

Yields out long were seen higher by 2 basis points to 3 bps while shorter maturities were unchanged to slightly better, said a trader.

“We are seeing some pressure from Treasuries, but it’s kind of tough to pinpoint a direction right now,” the trader said in the afternoon.

Trading activity was reportedly better than it has been in recent sessions, but weaker Treasuries pushed yields higher in some maturities, said a trader.

Some positive economic data shoved the five-year Treasury note yield up 5 bps to 1.7% and the 10-year note yield up 4.5 bps to 2.509%. The 30-year bond yield rose by 4 bps to 3.298%.

Omaha power bonds price

Heading up the day’s pricing action, the Omaha Public Power District of Nebraska sold $204.75 million of series 2014 electric system revenue bonds. The offering was upsized from $111.15 million.

The deal included $155,545,000 of series 2014AA bonds and $49,205,000 of series 2014BB bonds.

The 2014AA bonds are due 2016 to 2027 with term bonds due in 2030, 2032, 2034 and 2036. The serial coupons range from 2% to 5% with 0.27% to 2.81% yields. The 2030 bonds have a 2.25% coupon and priced at par, and the 2032 bonds have a 5% coupon and priced at 114.376 to yield 3.22%. The 2034 bonds have a 4% coupon and priced at 102.688 to yield 3.66%, and the 2036 bonds have a 4% coupon and priced at 101.888 to yield 3.76%.

The 2014BB bonds are due Feb. 1, 2042, have a 4% coupon and priced at par.

The bonds (Aa3/AA-/) were sold through Morgan Stanley & Co. LLC and Edward D. Jones & Co. LP.

Proceeds will be used to refund the district’s series 2007AA, 2005B and 2006C revenue bonds.

Frisco brings certificates

Moving to the competitive market, the City of Frisco, Texas, offered $90 million of series 2014A combination tax and limited surplus revenue certificates of obligation.

The certificates (Aa1/AA+/) were sold competitively. Wells Fargo Bank, NA won the bid at a 3.803007% true interest cost, said Nell Lange, the city’s assistant manager.

The certificates are due 2017 to 2030 with a term certificate due in 2038, said a pricing sheet. The serial coupons range from 0.95% to 3.70% and all priced at par. The 2038 certificates have a 4.15% coupon and priced at par.

“We are not required to sell debt as competitive but felt that there would be a lot of interest in this issue and that might get us a more favorable rate,” Lange said in an interview Thursday.

“The last bonds that we issued were last summer, and we had a 3.847149% TIC.”

Proceeds will be used for city capital projects.

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