Municipals end mixed as Treasuries slide; New York City Transitional holds retail order period

By Sheri Kasprzak

New York, Jan. 15 - For the second straight session, municipals ended mixed, with weakness seen mostly inside of 10 years, traders reported.

Short- to intermediate-term municipals were off by 1 basis point to 2 bps as Treasuries continued to slide for the second consecutive session, insiders said.

"We're still outperforming Treasuries," a trader said during the afternoon.

"Trading is a little more subdued, and the bigger deals of the week are pricing, but I think we're holding out for Thursday."

Thursday is when the New York City Transitional Finance Authority is slated to price $825 million of future tax secured bonds.

Retail order period held

The New York City Transitional Finance Authority conducted the first of two retail order periods on Tuesday. The authority will price its $825 million of series 2014B future tax secured bonds for institutional investors on Thursday.

The 2040 maturity was structured as a 4.375% coupon to yield 4.46% in retail, a market source reported Wednesday.

The bonds will be sold through both competitive and negotiated sales. The deal includes $775 million of series 2014B-1 tax-exempt bonds and $50 million of series 2014B-2 taxable bonds.

J.P. Morgan Securities LLC is the senior manager for the 2014B-1 bonds, and the 2014B-2 bonds will be sold competitively with Public Resources Advisory Group and Public Financial Management Inc. as the financial advisers.

Proceeds will be used to finance general capital expenditures for the city.

Puerto Rico levels improve

According to Alan Schankel, managing director with Janney Montgomery Scott LLC, Puerto Rico trading levels continue to improve.

"Last week, we noted long maturity Cofina blocks traded at lower yields, and we see the trend continuing with a million-dollar block of PR GO 5% of 41 printing on MSRB Tuesday at 8.20%, well below 8.78% to 9.01% block trades earlier this month," Schankel said Wednesday.

"Although deals are scarce, the commonwealth plans to sell bonds in coming weeks, probably using a Cofina third-lien structure, so firmer secondary trading levels will be welcome."

Johnson County bonds detailed

On Wednesday, the Johnson County Unified School District No. 229 of Kansas released additional information on its $61 million of series 2014A school building bonds.

The bonds (/AA+/) were sold competitively. Citigroup Global Markets Inc. won the bid at a 3.0622239% true interest cost, said Kaci Brutto, spokeswoman for the district.

The bonds are due 2014 to 2033 with 3% to 5% coupons.

Proceeds will be used to finance school facilities within the district.

"Kansas statutes require that all 'new money' general obligation bond issues over $2 million be sold via competitive sale," Brutto said Wednesday.

"All of the $61 million was new money. A negotiated sale can be utilized if a bond issue includes a refinancing component. However, the district has historically sold refinancing bonds via competitive sale too."

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