Municipals down amid weak Treasuries, primary glut; Iowa Finance prices $1.19 billion bonds

By Sheri Kasprzak

New York, Dec. 11 - Municipals were weaker on Tuesday as a glut of new deals flooded the market and Treasuries softened, market sources reported.

"Yields were definitely higher," said one trader.

"We've been range-bound for the past week or so. This is the first time we've seen much movement until now, but we are seeing some supply pressure, and weaker Treasuries are impacting us as well," the trader said.

Meanwhile, the City of New York reportedly had to cut levels on its $862.74 million of general obligation bonds (Aa2/AA/AA), said a market source reached Tuesday.

Retail investors, as previously reported, approached the offering with some trepidation.

"New York City entered day two of a retail order period on $850 million G.O.s with upward yield adjustments on maturities 2019 and beyond, although the longest maturity, 2033, still has preliminary pricing of 3% at par," said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"We note that although this week's supply levels indicate the biggest week since midyear, absorption of the issuance should present minimal challenge given the continued demand evidenced by positive flows into municipal bond funds, including $1.3 billion in the latest reporting period."

The city will price the bonds in two tranches - $503.15 million of series 2013D bonds and $359.59 million of series 2013E bonds - through Raymond James/Morgan Keegan.

Iowa fertilizer bonds price

Elsewhere in primary action Tuesday, the Iowa Finance Authority priced $1,194,000,000 of series 2012 Midwestern disaster area revenue bonds for the Iowa Fertilizer Co., according to a pricing sheet.

The bonds (/A-1+/) were sold through Citigroup Global Markets Inc.

The bonds are due Dec. 1, 2050 and bear interest initially at 0.18% until the mandatory tender termination date of April 12, 2013.

Proceeds will be used to finance the construction of a nitrogen fertilizer plant in Lee County, Iowa.

Wednesday's heavy calendar

Wednesday will provide another heavy day for issuance, led by major competitive offerings.

The State of Georgia is ready to go with $583.48 million of G.O.s to construct, equip, acquire and renovate state land, properties, buildings and other infrastructure and to refund G.O. debt.

The offering will price in three tranches.

Elsewhere, the Tampa-Hillsborough County Expressway Authority of Florida is set to price $454.72 million of refunding revenue bonds through Bank of America Merrill Lynch and Raymond James.

That deal will price in four tranches.

Proceeds will be used to finance expressway improvements and refund the authority's series 2002 and 2005 expressway revenue bonds.

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