Municipals rally as secondary action picks up; Texas Transportation sells $813.18 million

By Sheri Kasprzak

New York, Nov. 15 - Municipal yields were firmer yet again on Thursday as Treasuries improved and secondary market activity picked up. Yields were better by 3 basis points to 5 bps in most spots with yields better by as much 7 bps to 8 bps in intermediate maturities, said one trader reached in the afternoon.

"We're still benefiting a great deal from the post-election environment," said one market source.

"There's still a good amount of interest in secondary, despite the lack of supply there. New issues are pricing well."

Meanwhile, 30-day visible supply for new issues is about $12.7 billion, said Alan Schankel, managing director with Janney Montgomery Scott LLC. This marks the highest level of visible supply since June, he noted.

Texas Transportation prices

Heading up the day's primary activity, the Texas Transportation Commission came to market with one of the largest offerings of the week - $813.18 million of series 2012 Central Texas Turnpike System revenue refunding bonds, according to a pricing sheet.

The bonds (//BBB+) were sold through J.P. Morgan Securities LLC.

The bonds are due 2038, 2041 and 2042. The 2038 bonds have a 4% coupon priced at par. The 2041 bond shave a 5% coupon priced at 111.127, and the 2042 bonds have a 1.25% coupon and were not reoffered.

Proceeds will be used to finance capital improvements to the turnpike system.

Dallas-Fort Worth prices

In other news Thursday, the Cities of Dallas and Fort Worth, Texas, priced $480 million of series 2012H Dallas/Fort Worth International Airport joint revenue improvement bonds, according to a pricing sheet.

The bonds (/A+/A+) were sold through Bank of America Merrill Lynch and JPMorgan.

The bonds are due 2025 to 2032 with term bonds due in 2037, 2042 and 2045. The serial coupons range from 3.25% to 5%. The 2037 bonds have a split maturity with a 3.75% coupon priced at 97.465 and a 5% coupon priced at 110.262. The 2042 bonds have a 5% coupon priced at 109.863. The 2045 bonds have a 4% coupon priced at 98.555 and a 5% coupon priced at 109.465.

"Dallas-Fort Worth Airport finalized pricing on $480 million with enough demand to upsize the issue from $345 million," Schankel said.

"Yields in many maturities finished lower than initial pre-marketing levels. Other new issues accumulated strong order books, with final yields on many dropped from initial pricing levels."

Proceeds will be used to finance capital improvements to the Dallas/Fort Worth International Airport, as well as to fund capitalized interest.

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