Municipals retain firmer tone amid lighter trading, busy primary; Oregon lottery bonds price

By Sheri Kasprzak

New York, July 16 – Municipals rounded out another busy primary session on a firmer note with secondary activity remaining muted, said traders.

“We’re seeing a lot of activity around 10 years and a firmer tone throughout the curve, but at 30 years, we seem to be tapering off a bit,” a trader said in the afternoon.

Meanwhile, the market seems to have absorbed the fallout from the Puerto Rico debacle from the past few weeks after the commonwealth approved legislation that would make it easier for public corporations to restructure debt or even default.

“Trading in PR 8% of 35 was stronger yesterday [Tuesday], with an average block trade yield of 9.36%, compared to 9.53% on Monday and the 9.77% high point reached on July 3,” said Alan Schankel, managing director with Janney Montgomery Scott LLC.

“PR Electric Power Authority trading also showed improvement with block trades of 5.25% of 2040 in the 45 price range, almost 4 points higher than average prices last week.”

Oregon lottery bonds sold

Amid the primary action from the day, the Oregon Department of Administrative Services hit the market with $215.35 million of series 2014 Oregon State Lottery revenue bonds.

The deal included $19.34 million of series 2014A bonds, $91.04 million of series 2014B bonds and $104.97 million of series 2014C bonds, said a pricing sheet.

The 2014A bonds and 2014B bonds are due 2015 and 2018 to 2027 with 2% to 5% coupons. The 2014C bonds are due 2015 and 2022 to 2025 with 2% to 5% coupons.

The bonds (Aa2/AAA/) were sold through Goldman Sachs & Co. and Citigroup Global Markets Inc.

Proceeds will be used to refund the department’s series 2006A, 2007A and 2009A lottery revenue bonds.

Tennessee brings G.O. bonds

Elsewhere during the session, the State of Tennessee priced $190,085,000 of series 2014 general obligation bonds.

The deal included $111.46 million of series 2014A G.O. bonds and $78,625,000 of series 2014B G.O. refunding bonds, said a pricing sheet.

The 2014A bonds are due 2015 to 2034 with coupons from 3% to 5%. The 2014B bonds are due 2025 to 2029 with 5% coupons.

The bonds (Aaa/AA+/AAA) were sold through Morgan Stanley & Co. LLC.

Proceeds will be used to finance capital projects for the state, retire at maturity its commercial paper notes and refund the state’s series 2008A and 2009C G.O. bonds.

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