Munis end flat to weaker as Treasuries slide; Rhode Island upsizes bonds to $334.51 million

By Sheri Kasprzak

New York, Oct. 16 – After rallying along with stronger Treasuries for most of the week, municipals broke the winning streak on Thursday, closing flat to somewhat weaker in spots, traders said.

Yields were down about a basis point around 10 years but flat across most of the curve, said a trader in the afternoon.

Meanwhile, stronger stocks and positive economic data pushed Treasury yields back up on Thursday. The 10-year benchmark Treasury yield rose by 2 bps to 2.17%, and the 30-year bond yield rose 2 bps to 2.94%.

Treasuries lost ground after stocks improved and St. Louis Federal Reserve president James Bullard questioned whether the Fed should cut its bond-purchasing program amid growing global economic crises.

Rhode Island brings G.O. bonds

Leading the day’s primary action, the State of Rhode Island brought to market an upsized $334.51 million of series 2014 general obligation bonds. The deal was increased from $208,415,000.

The deal included $33,625,000 of series 2014B tax-exempt consolidated capital development loan G.O. bonds, $12.5 million of series 2014C capital development loan G.O. bonds and $288,385,000 of series 2014D tax-exempt consolidated capital development loan refunding G.O. bonds.

The 2014B bonds are due 2015 to 2034 with 1% to 5% coupons.

The 2014C bonds are due 2015 to 2026 with term bonds due in 2031 and 2034. The serial coupons range from 0.42% to 3.398% and all priced at par. The 2031 bonds have a 3.898% coupon, and the 2034 bonds have a 4.175% coupon. Both priced at par.

The 2014D bonds are due 2017 to 2031 with 4% to 5% coupons.

The bonds (Aa2/AA/AA) were sold on a negotiated basis with J.P. Morgan Securities LLC and Janney Montgomery Scott LLC as the senior managers for the 2014B-C bonds and Raymond James/Morgan Keegan and Ramirez & Co. Inc. as the senior managers for the 2014D bonds.

Proceeds will be used to finance capital improvement loans for local entities and to refund existing debt.

Omaha trades heavily

Moving to secondary action, the Omaha Public Power District of Nebraska priced $132.62 million of series 2014 electric system subordinated revenue bonds during the session, and the bonds were very heavily traded in secondary.

The 3.625% 2040 series 2014DD bonds were seen trading on Thursday between 3.624% and 3.747% after pricing Thursday at par.

Thursday’s deal also included $108.39 million of series 2014CC bonds due 2031, 2035 and 2038 with 4% coupons and yields between 3.01% and 3.36%.

Proceeds will be used to finance capital improvements to the electric system, to refund the district’s series 2007AA bonds and to redeem its series 2006A bonds.

Morgan Stanley & Co. LLC and Edward D. Jones & Co. LP were the senior managers for the bonds (Aa3/AA-/).

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