Municipals end mostly unchanged; Texas brings to market $5.4 billion TRANs; Detroit to price

By Sheri Kasprzak

New York, Aug. 26 – Municipals were mostly flat on Tuesday, market insiders said.

Secondary activity remained subdued Tuesday, and with little primary action and Treasuries closing slightly weaker, municipals held steady, said a trader in the afternoon.

The session was quiet but included the week’s largest deal, the State of Texas’ $5.4 billion of tax and revenue anticipation notes.

The notes (MIG 1) were sold competitively Tuesday morning, and 11 bidders jumped onto the offering. J.P. Morgan Securities LLC won $2.13 billion of the notes. Citigroup Global Markets Inc. won $650 million. BofA Merrill Lynch took $800 million, and Wells Fargo Bank, NA won $700 million. Morgan Stanley & Co. LLC won a $500 million portion, and Goldman Sachs & Co. took a $250 million portion. Barclays won $265 million. MUFG took $25 million, U.S. Bancorp Investments Inc. won $20 million, RBC Capital Markets LLC won $50 million, and Piper Jaffray & Co. took $10 million.

The weighted average net interest cost was 0.13259750128%.

The notes are due Aug. 31, 2015, bear interest at 1.5% and priced at 101.356.

Proceeds will be used to finance capital expenditures for the coming fiscal year.

Detroit to price

Coming later this week, the City of Detroit will offer $1,790,500,000 of water and sewer debt to refund existing bonds and make infrastructure improvements.

The offering comes after last week’s tender offer.

The deal includes $152.2 million

sewage disposal system revenue senior-lien local project bonds, $683.5 million of sewage disposal system revenue refunding senior-lien local project bonds, $99.8 million of sewage disposal system revenue refunding second-lien local project bonds, $774.3 million of water supply system revenue refunding senior-lien local project bonds and $80.7 million of water supply system revenue refunding second-lien local project bonds.

Fitch Ratings announced Tuesday that it will rate the senior-lien bonds BBB- and the second-lien bonds BB+.

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