Municipals rally along with strong Treasuries; Massachusetts Development brings Partners bonds

By Sheri Kasprzak

New York, Jan. 20 – Municipals closed Wednesday on a stronger note with yields falling as much as 4 basis points, traders said, as Treasuries climbed on weak oil and stocks.

During the session, the 10-year bond yield fell by 2 bps to 1.83% and the 30-year yield declined by 4 bps to 2.75%.

Over in Treasuries, the 30-year bond yield dropped by 5 bps to 2.77% and the 10-year benchmark note yield closed 5 bps lower at 2.01%. The five-year note yield fell by 5 bps to 1.44%, and the two-year yield rounded out the session 3 bps lower at 0.85%.

Meanwhile, the Dow Jones industrial average dove by 249.28 points to 15,766.74 and the Nasdaq dipped 5.26 points to 4,471.69. The S&P 500 declined 22 points to 1,859.33. Oil prices in the United States dropped to 13-year lows.

Elsewhere in the market, Lipper Inc. reported that municipal bond funds saw $994.8 million of inflows last week after seeing $992.7 million of inflows the previous week. High-yield funds also saw inflows last week.

Chicago BOE downgraded

The Chicago Board of Education is on tap to price a significant offering, but two ratings agencies took the axe to the board’s general obligation debt.

Standard & Poor’s downgraded the board’s G.O. debt to B+ from BB, and Fitch Ratings lowered its BB+ rating to B+. In December, Moody’s cut the board’s debt to B1 from Baa3, after which time it was asked to no longer rate the credit.

The school board is set to price $875 million of G.O. bonds next week through J.P. Morgan Securities LLC and Barclays.

Partners bonds price

Moving to Wednesday’s primary action, the Massachusetts Development Finance Agency sold $423.99 million of series 2016Q revenue bonds for Partners Healthcare System. The offering was upsized from $235,275,000.

The bonds (/AA-/AA) were sold through senior manager JPMorgan.

The bonds are due 2017 to 2036 with term bonds due in 2041 and 2047. The serial coupons range from 3% to 5% with yields from 0.60% to 3.36%. The 2041 bonds have a 4% coupon that priced at 103.361 to yield 3.61% and a 5% coupon that priced at 115.75 to yield 3.21%. The 2047 bonds have a 4% coupon that priced at 102.573 to yield 3.70% and a 5% coupon that priced at 114.89 to yield 3.30%.

Proceeds will be used to finance the construction and equipment of a new clinical research facility, an underground parking facility, an administrative building and a special care nursery as well as capital improvements to other Partners facilities.

Aldine ISD sells debt

Elsewhere during the session, the Aldine Independent School District of Texas priced $265,455,000 of series 2016 unlimited tax school building and refunding bonds.

The bonds (Aaa/AAA/) were sold through senior managers Wells Fargo Securities LLC and Baird & Co. Inc.

The bonds are due 2018 to 2041 with a term bond due in 2044. The serial coupons range from 3% to 5% with yields from 0.79% to 3.35%. The 2044 bonds have a 4% coupon and priced at 106.382 to yield 3.18%.

Proceeds will be used to construct, acquire, improve and renovate school buildings in the district and to refund the district’s series 2007A bonds.

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