Municipals continue to slide as secondary pressure mounts; Texas brings $98.55 million bonds

By Sheri Kasprzak

New York, May 23 - Municipal yields were softer again on Thursday as secondary pressure continued to affect the market, said traders.

"We're feeling the pinch of secondary pressure," a trader said in the early afternoon.

"Yields are probably up 3 to 4 basis points. There's not a great deal trading."

Despite firmer Treasuries in the afternoon, price discovery for municipals was troubled by secondary inertia, market sources said.

Texas college bonds price

In primary action, the State of Texas came to market with $98.55 million of series 2013A college student loan refunding bonds, said a pricing sheet.

The bonds (Aaa/AA+/) were sold competitively. J.P. Morgan Securities LLC won the bid with a 1.166544% true interest cost, said Patrick Krishock, senior financial analyst for the Texas Higher Education Coordinating Board.

The bonds are due 2014 to 2023 with 2% to 5% coupons and 0.3% to 2.2% yields.

"When the board sold its series 2012 bonds last July, we received a TIC of 2.742083%," Krishock said in an interview Thursday.

"The 2013 transaction was structured with a shorter maturity schedule - 10 years - and rapid principal amortization. That, as well as today's current low rates, accounted for the lower TIC for the series 2013 bonds."

Proceeds will be used to refund the state's series 1999 college student loan bonds and its series 2003 variable-rate college student loan and refunding bonds.

Louisiana sells G.O. bonds

Elsewhere during the session, the State of Louisiana brought $157,815,000 of series 2013C general obligation refunding bonds, said a pricing sheet.

The bonds (Aa2/AA/AA) were sold through Goldman Sachs & Co. and Raymond James/Morgan Keegan.

The bonds are due 2013 to 2026 with 1.75% to 5% coupons.

Proceeds will be used to refund the state's series 2006A and 2008A G.O. bonds.

The state last came to market with G.O. bonds on May 7, when it competitively sold $300 million of debt.

In that sale, the state sold $130.71 million of series 2013A G.O. bonds and $169.29 million of series 2013B taxable G.O. bonds.

The 2013A bonds are due 2014 to 2033 with 2% to 5% coupons and 0.40% to 3.07% yields, and the 2013B bonds are due 2014 to 2026 with 0.24% to 2.88% coupons and 0.24% to 2.88% yields.

Proceeds from that offering will finance general government, cultural, tourism, recreation, public safety, corrections, transportation and education projects.

BofA Merrill Lynch won the bid for the 2013A bonds, and Raymond James/Morgan Keegan won the 2013B bonds.

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