Municipals slide as Treasuries take a hit; Minnesota State Colleges brings $85.8 million bonds

By Sheri Kasprzak

New York, Feb. 8 - Following along with a weaker Treasury market, municipals weakened yet again on Tuesday, said a trader.

"Unfortunately, things are so volatile right now that any negative news is going to take us down," said one trader reached Tuesday.

"Treasuries are off, so we're falling along with them. We have seen a decent amount of trading going on today, but yields are suffering because of Treasuries."

Muni yields were off by 1 to 5 basis points across the yield curve, said the trader.

Treasuries took a slip after the first of three U.S. securities sales - for $32 billion of three-year debt - saw dismal demand.

The news wasn't all bad, according to Alan Schankel, managing director with Janney Montgomery Scott LLC, as some issuers received good news from ratings agencies.

"After a tough week to start out February, rating news was more positive on Monday," said Schankel.

"Massachusetts saw an upward outlook revision to positive from S&P, with the rating agency noting ... the commonwealth's ongoing progress in improving financial, debt and budget management practices."

S&P also upgraded its ratings on Delton, Fla.'s utility system bonds to A from A- and Mansfield, N.J., to A+ from A, he noted.

Governors not raising taxes?

Despite the fact that 13 governors have sworn not to raise taxes, many voters are anticipating tax increases, Schankel said Tuesday.

"We expect a mixed bag, with some governors sticking to their guns and others forced to increase taxes or take a backdoor route by increasing fees," he noted.

"[New Jersey] Gov. [Chris] Christie shot down New Jersey's commitment to a trans-Hudson rail tunnel, but Amtrak is back with a $13.5 billion plan to build two tunnels beneath the river. It's early stage, and the whos and hows of funding are yet to be determined, but New Jersey's senators participated in an announcement that Amtrak will spend $50 million for preliminary engineering and design work on the project."

Minnesota colleges bonds price

Heading up a light day for primary action, Minnesota State Colleges and Universities priced $85.8 million of series 2011 revenue fund bonds, said a pricing sheet.

The sale included $82.4 million of series 2011A tax-exempt bonds and $3.4 million of series 2011B taxable bonds.

The bonds (Aa2/AA-/) were sold competitively. Robert W. Baird & Co. won the bid for the 2011A bonds, and Wells Fargo Bank, NA won the 2011B bonds.

The 2011A bonds are due 2012 to 2031 with 3% to 5% coupons. The 2011B bonds are due 2012 to 2021.

Proceeds will be used to construct a student wellness center and a new parking ramp as well as renovate resident and dining halls at various state universities, colleges and community colleges.

Moses Cone Health brings bonds

Also during the session, the North Carolina Medical Care Commission sold $60.25 million of series 2011A revenue refunding bonds for Moses Cone Health System, said a pricing sheet.

The bonds (/AA/AA) were sold through Morgan Stanley & Co. Inc.

The bonds are due 2013 to 2023 with 3.2% to 5% coupons.

Proceeds will be used to refund the health-care system's series 1993 bonds.

Located in Raleigh, the commission acts as a regulatory agency for the state's health-care systems.

Based in Greensboro, N.C., Moses Cone Health operates acute care hospitals.

Texas housing bonds sold

In other news, the Texas Department of Housing and Community Affairs priced $59.62 million of series 2011A non-AMT residential mortgage revenue bonds, said a pricing sheet.

The bonds were sold through Morgan Keegan & Co. Inc. and J.P. Morgan Securities LLC.

The bonds are due 2012 to 2022 with term bonds due in 2026 and 2029. The serial coupons range from 0.7% to 4.55%, all priced at par. The 2026 bonds have a 5.05% coupon priced at par, and the 2029 bonds have a 5% coupon priced at par.

Proceeds will be used to fund mortgage loans.

Based in Austin, the department provides mortgage loans and other services to low- to moderate-income Texans.

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