Municipals continue to rally as retail snaps up bonds; Connecticut brings $326.92 million

By Sheri Kasprzak

New York, May 17 - Municipals continued to improve on Tuesday as retail investors flocked to bonds, said traders. A new flood of offerings, including a major sale from the State of Connecticut, were well received by investors, market insiders reported, helping fuel the ongoing rally.

"The longer bonds are doing the best," noted one trader. "Outside of 20 years, yields are down by 5 [basis points]. Everywhere else is down by 1 to 4 [basis points]. Short bonds aren't moving much."

Municipals, the trader said, were likely getting a boost from improved Treasuries, but he added that municipals look good in their own right.

"Retail is warming up again [to municipals]," he said.

He said that investors who were previously spooked by speculation of widespread defaults and bankruptcies were now feeling more comfortable with the market.

Connecticut prices

Heading up the day's primary action, the State of Connecticut brought $326.915 million of series 2011 general obligation bonds in three tranches, said pricing sheets.

The sale included $162.87 million of series 2011B tax-exempt G.O. bonds, $89.045 million of series 2011B taxable G.O. bonds and $75 million of series 2011C Sifma index bonds.

The 2011B tax-exempts are due 2019 to 2023 with 2.3% to 5% coupons. The 2011B taxables are due 2012 to 2015 with coupons from 0.38% to 2.12%, all priced at par. The 2011C bonds include $50 million of bonds due in 2016 and $25 million of bonds due in 2019. The 2016 bonds bear interest at 65 bps over the Sifma index rate and the 2019 bonds at 110 bps over the Sifma index rate.

M.R. Beal & Co. Inc. was the lead manager for the bonds.

"Compared to Friday's levels, yields were lower for the 2019 and 2020 maturities of this relatively short loan," said Alan Schankel, managing director at Janney Montgomery Scott LLC.

Proceeds will be used to fund capital requirements and to retire bond anticipation notes.

Texas bonds price

Elsewhere, the State of Texas priced $133.5 million of series 2011A water financial assistance G.O. bonds, said a pricing sheet.

The bonds (Aaa/AA+/AAA) were sold through Jefferies & Co.

The bonds are due 2011 to 2030 with 1% to 5% coupons.

Proceeds will be used to provide financial assistance to political subdivisions for water infrastructure requirements.

Northside ISD brings bonds

Also during the session, the Northside Independent School District of San Antonio came to market with $84 million of series 2011A unlimited tax variable-rate refunding bonds, said a pricing sheet.

The bonds (//AAA) were sold through Raymond James & Associates Inc.

The bonds are due June 1, 2039 and have an initial rate of 1.35%, priced at par. The bonds will bear interest at the initial rate from May 31, 2011 to May 31, 2014, at which time the rate will convert to the term rate mode.

Proceeds will be used to refund the district's series 2009 variable-rate bonds.

Missouri sells COPs

In the competitive market, the State of Missouri sold $76.91 million of series 2011A refunding certificates of participation, said a pricing sheet.

The COPs (Aa1/AA+/AA+) were sold competitively. J.P. Morgan Securities LLC won the bid with a 1.867424% true interest cost.

The COPs are due 2013 to 2018 with coupons from 1.25% to 2.125%.

Proceeds will be used to prepay the state's series 2005A COPs.

Missouri student bonds ahead

Coming up in June, the Higher Education Loan Authority of the State of Missouri is expected to come to market with $579 million of series 2011-1 student loan asset-backed Libor floating-rate notes, said a preliminary official statement.

The notes (/AAA/AAA) will be sold on a negotiated basis with Morgan Stanley & Co. Inc. as the lead manager.

Proceeds will be used to acquire student loans.

Based in Chesterfield, Mo., the authority provides and services student loans.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.