New York City sells $989.9 million in G.O.s; Pennsylvania brings $616.86 million in G.O.s

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, May 19 - Municipals were seen firmer again on Tuesday with an active trading session, even as the primary market remained at the forefront of investor interest, market insiders said.

"We're very primary focused today," said one trader reached during the day.

"Lots in the pipeline the next few days, so it's taking a bit of focus away from secondary. Still, we're a bit firmer on the long end, and volume is still pretty good."

The trader noted that the short end of the curve was mostly unchanged.

Tuesday's brisk trading saw "tons of retail interest in long 5%-plus munis," another trader said.

Mostly the attention was focused on general obligation bonds, but "good quality revenue bonds" also traded well.

For the rest of the week, the calendar looks "pretty heavy," the trader said, but demand remains high for new paper.

"I'm sure they'll all do well," he said.

Interest rates are coming in with little in the way to change that, he added.

NYC sells

Moving to the active primary calendar from Tuesday, the City of New York sold $989.9 million in series 2009J general obligation bonds, said a sellside source familiar with the offering.

The sale included $600 million in series 2009J-1 bonds, $190 million in series 2009J-2 taxable bonds and $199.9 million in series 2009K bonds.

The 2009J-1 bonds are due 2011 to 2036 with coupons from 3% to 5% and yields from 1.62% to 4.97%. The series 2009J-2 bonds are due 2013 to 2021 with coupons from 3.35% to 5.125%, all priced at par. The 2009J-2 bonds were sold competitively with Piper Jaffray & Co. as the winning bidder with a 4.82% true interest cost.

The 2009K bonds are due 2010 to 2019 with coupons from 2% to 5% and yields from 1.62% to 3.76%.

Merrill Lynch & Co. Inc. was the lead manager for the 2009J-1 and 2009K bonds.

Proceeds will be used for capital expenses.

Pennsylvania prices

Another major offering came to market Tuesday, this one from the Commonwealth of Pennsylvania. The commonwealth priced $616.86 million in series 2009 G.O. bonds, said Rick Dreher, head of the governor's budget office.

The bonds were sold competitively. J.P. Morgan Securities Inc. was the winning bidder for the deal with a 3.482794% TIC. There were six bidders for the offering.

Public Financial Management Inc. was the financial adviser.

The sale included $454 million in series 2009 second bonds and $162.86 million in first refunding bonds.

The second bonds are due 2010 to 2029 with coupons from 2% to 5%, all priced at par. The first refunding bonds are due 2009 to 2014 with coupons from 2% to 4%, also priced at par.

"We're very pleased," Dreher said.

"The new money bonds, comparatively, are 54 basis points lower than where we were in March 2009, and 140 basis points where we were in December 2008, so we're very pleased with the sale."

Proceeds will be used for capital improvements and the protection of open space, farmlands and watershed areas.

In reoffering news, the 4% 2023 bonds moved up and down substantially during the session, first gaining almost 95 bps and then losing 48 bps before settling at a pricing level of 4%.

A trader said she didn't see the rest of the bonds reoffered.

"There hasn't been a lot of reoffering activity with these. I've only seen the 2023s. It's hard to tell why," she said.

Ohio prices

The State of Ohio priced $233.705 million in series 2009 G.O. refunding bonds at a 2.869% TIC (Aa1/AA+/AA+) on Monday, according to Kurt Kauffman, director of debt management.

The bonds carry maturities from 2012 to 2020 and range in yields from 1.57% to 3.39%.

"We think it went pretty well," Kauffman said. "We did fairly well with retail and institutional business and in the tough part of the curve."

The state managed to get "about the TIC we were expecting," Kauffman said, but "we were happy to get in at a time that the market was that low."

"We thought we could get in under 3%," he added.

The $48.7 million series 2009B are considered higher education G.O. refunding bonds.

The $102.9 million series 2009B are considered common schools G.O. refunding bonds, while the $81.9 million series 2009B are considered infrastructure improvement G.O. refunding bonds.

Merrill Lynch and Fifth Third Securities Inc. acted as underwriters for the negotiated deal.

Proceeds will be used to refund outstanding debt.

St. Lawrence floats

The St. Lawrence County Industrial Development Authority, N.Y., priced $56.85 million series 2009A civic facility revenue bonds (A2) on behalf of St. Lawrence University Tuesday, according to Kathryn Mullaney, vice president of finance.

The bonds converted variable-rate bonds with nearly 20-year maturities to bonds due from 2010 to 2016.

"It took a little longer to price than expected," Mullaney said, "because of the unusual structure."

"We were converting variable demand to fixed," she said.

Still, "I was happy with the outcome," she said.

Morgan Stanley & Co. Inc. acted as lead underwriter for the negotiated deal.

The authority is located in Canton, N.Y.

Wisconsin Health ahead

Looking to upcoming sales, the Wisconsin Health and Educational Facilities Authority plans to sell $127.39 million in series 2009 revenue bonds for ThedaCare Inc., said a preliminary official statement. The offering, according to a sales calendar, is set to price the week of May 25.

The sale includes $90 million in series 2009A bonds and $37.39 million in series 2009B bonds.

The 2009A bonds are due 2011 to 2024 with term bonds due 2029 and 2038. The 2009B bonds are due 2009 to 2029.

Merrill Lynch is the senior manager for the negotiated sale.

Proceeds will be used to construct, equip and renovate health-care facilities; refund outstand debt; and make a deposit to a debt service reserve fund.

The Wisconsin Health and Educational Facilities Authority is based in Brookfield, Wis.

Secondary firms

Moving to the secondary market, traders said the market was looking a bit firmer but not moving much, thanks to a very healthy primary market.

"Everyone is looking at primary right now," said one trader. "As we move into Wednesday, I predict the main focus is going to be primary and we may experience some weakness, but near the end of the week, things might improve a bit."

In other trading news, the East Baton Rouge Sewerage Commission's series 2009A revenue bonds were seen in action Tuesday. The 4.75% 2024s were seen at 4.62%.

The Clackamas County Health Facilities Financing Authority of Oregon saw its series 2009A revenue bonds for Legacy Health moving. The 4.25% 2017 bonds were seen at 4.099%.

Elsewhere, the Illinois Toll Highway Authority's series 2009A Build America Bonds were seen moving Tuesday. The 6.184% 2034 bonds were seen at 5.95%. The bonds priced earlier this month at par.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.