Municipals improve as primary dominates; Texas Transportation upsizes deal to $1.58 billion

By Sheri Kasprzak

New York, Dec. 4 – Municipals were stronger on the session Thursday as new issues continued to dominate market activity, traders reported.

Yields were lower by 1 basis point to 3 bps with maturities outside of 20 years experiencing the most gains, a trader said in the afternoon.

The new slate of issues, according to one trader, is drawing new investors to the market.

Although new offerings were king for the week, the supply is being well-absorbed, said another trader.

“There doesn’t seem to be a problem [with absorption],” he noted.

Municipals underperformed Treasuries, which got a boost from trouble in the European Union.

Texas Transportation prices

Looking to the largest offering of the week, the Texas Transportation Commission priced $1,580,160,000 of series 2014 general obligation mobility fund and refunding bonds. The offering was upsized from $1.4 billion.

The bonds (Aaa/AAA/AAA) were sold through senior managers BofA Merrill Lynch and Wells Fargo Securities LLC.

The bonds are due 2017 to 2035 with term bonds due in 2039 and 2044, according to a term sheet. The serial coupons range from 4% to 5% with 0.65% to 3.23% yields. The 2039 bonds have a 5% coupon priced at 115.744 to yield 3.12%. The 2044 bonds have a 4% coupon priced at 103.27 to yield 3.6% and a 5% coupon priced at 114.835 to yield 3.22%.

Proceeds will be used to construct, reconstruct, improve and expand state highways, as well as to refund outstanding parity debt.

Massachusetts upsizes deal

Another major deal for the week was also upsized. The Commonwealth of Massachusetts priced $347.31 million of series 2014A accelerated bridge program federal highway grant anticipation notes, bolstered from $330 million.

The notes were sold through lead manager BofA Merrill Lynch.

The notes are due 2016 to 2027 with 2% to 5% coupons.

Proceeds will be used to finance costs related to the state’s accelerated bridge program.

Nassau prices deal

Elsewhere, Nassau County, N.Y., brought to market $437.08 million of series 2014 G.O. bonds and tax anticipation notes.

The deal includes $237,755,000 of series 2014A general improvement G.O. bonds, $140 million of series 2014A tax anticipation notes and $59,325,000 of series 2014B tax anticipation notes.

The G.O.s are due 2016 to 2030 with 5% coupons and 0.5% to 3.18% yields.

The 2014A notes are due Sept. 15, 2015 and have a 2% coupon priced at 101.265.

The 2014B notes are due Oct. 15, 2015 and have a 2% coupon priced at 101.394.

The notes (/SP-1+/F1) were sold through senior manager BofA Merrill Lynch. The bonds (A2/A+/A) were sold competitively.

Proceeds will be used to finance county capital improvements.

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