Municipals slide after China cuts rate; Mission Economic Development leads $5.2 billion slate

By Sheri Kasprzak

New York, Oct. 23 – Municipals followed in line with a weaker Treasuries market Friday after China elected to cut its short-term lending rate to 4.35% in an effort to address its financial crisis.

Yields on top-rated municipals rose by 1 basis point to 3 bps across the curve. Meanwhile, Treasuries negatively responded to the Chinese rate cut with the five-year note yield rising by 7 bps to 1.43% and the two-year yield rising by 5 bps to 0.66%.

The week ahead will be a little more subdued for supply. The $5.2 billion of new offerings will be led by a $1.4 billion deal from the Mission Economic Development Corp.

The Mission offering will be offered on behalf of Natgasoline to finance the construction, equipment and installation of a methanol production facility in Beaumont, Texas.

The deal includes $1,159,860,000 of series 2015A taxable senior-lien revenue bonds and $240.14 million of series 2015B tax-exempt junior lien revenue bonds.

The bonds will be sold through BofA Merrill Lynch.

Southern states ready G.O.s

Two of the week’s larger deals will come from state issuers.

The State of Tennessee is in the market with $416.32 million of series 2015 general obligation bonds (Aaa/AA+/AAA) through Morgan Stanley & Co. LLC.

The offering includes $320 million of series 2015A G.O. bonds due 2016 to 2035 and $96.32 million of series 2015B G.O. refunding bonds due 2016 and 2018 to 2028.

Proceeds will be used to finance statewide capital projects, retire at maturity certain commercial paper notes and refund the state’s series 2009A and 2010A G.O. bonds.

Texas water sale set

Also coming up, the State of Texas is set to offer $222,475,000 of water financial assistance G.O. bonds (Aaa/AAA/AAA).

Jefferies & Co. is the senior manager for the bonds, which are due 2021 to 2035 with term bonds due in 2040 and 2045.

Proceeds will be used to finance water assistance projects.

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