Long bonds dip slightly as shorter maturities remain flat; Georgia brings nearly $1 billion

By Sheri Kasprzak

New York, June 21 - Municipal yields were largely unchanged on Tuesday as the week's major pricing activity commenced, traders reported.

"There's not a lot of movement short and intermediate, but past 30 years, yields are off by a basis point or so," said one trader.

The steady supply of primary offerings was being easily digested, the trader pointed out, and there was little pressure on yields across the curve.

The deal of the week hit the market and was well priced, according to one sellsider close to the deal. The State of Georgia priced $997.755 million of series 2011 general obligation bonds and G.O. refunding bonds.

"There was a good amount of interest, and pricing came around where we expected," he said.

The trader noted that the state's deal is more reflective of high-grade tax-exempts than the broader market.

"I'm doubtful that it will have a big impact on the broad market," he said before the full pricing terms were released.

"It's a high-grade bond, and the pricing is really only indicative of where high-grade bonds are rather than where the market in general is."

Bonds sold in seven tranches

The bonds were priced competitively Tuesday in seven tranches: $39.105 million of series 2011A G.O. bonds, $28 million of series 2011B G.O. bonds, $412.51 million of series 2011C G.O. bonds, $77 million of series 2011D federally taxable qualified school construction G.O. bonds, $69.7 million of series 2011E-1 G.O. refunding bonds, $245.69 million of series 2011E-2 G.O. refunding bonds and $125.75 million of series 2011F G.O. refunding bonds.

Citigroup Global Markets Inc. came away with the winning bid for the series 2011A G.O. bonds, 2011B G.O. bonds, 2011C G.O. bonds and 2011D federally taxable qualified school construction G.O. bonds, a market source familiar with the deal reported.

Bank of America Merrill Lynch took the series 2011E-1 G.O. refunding bonds, 2011E-2 G.O. refunding bonds and 2011F G.O. refunding bonds, said the market insider.

The 2011A bonds are due 2012 to 2016 with coupons from 3% to 5%. None of the bonds were reoffered.

The 2011B bonds are due 2012 to 2021 with 2% to 5% coupons.

The 2011C bonds are due 2012 to 2031 with 3% to 5% coupons.

The 2011D bonds are due 2017 to 2025 with a term bond due in 2027. The serial coupons range from 2.7% to 4.15%. The 2027 bonds have a 4.3% coupon priced at 100.805.

The 2011E-1 bonds are due 2012 to 2016 and 2019 to 2020 with 4% to 5% coupons. The 2011E-2 bonds are due 2012 to 2013 and 2015 to 2021 with coupons from 4% to 5%.

The 2011F bonds are due 2011 to 2020 with 3% to 5% coupons.

Proceeds will be used to construct, develop, improve, expand or enlarge land, water, property, buildings and other state facilities, to provide educational facilities for county and independent school systems within the state and to refund the state's series 2006H bonds.

Dasny sells dorm bonds

Elsewhere, the Dormitory Authority of the State of New York priced $260 million of series 2011A state university dormitory facilities lease revenue bonds, said a pricing sheet.

The bonds (Aa2//AA-) were sold through Siebert Brandford Shank & Co. LLC and Ramirez & Co. Inc.

The bonds are due 2012 to 2031 with term bonds due in 2035 and 2041. The serial coupons range from 2% to 5%. The 2035 bonds have a 5% coupon priced at 104.878. The 2041 bonds have a 5% coupon priced at 104.138.

Proceeds will be used to construct, repair, renovate and equip student dormitory facilities at state universities.

Tri-County brings deal

In other news, the Tri-County Metropolitan Transportation District of Oregon sold $142.38 million of series 2011 capital grant receipt revenue bonds, said a pricing sheet.

The offering included $136.04 million of series 2011A tax-exempt bonds and $6.34 million of series 2011B taxable bonds.

The 2011A bonds are due 2016 to 2027 with coupons from 2.5% to 5%. The 2011B bonds are due Oct. 1, 2016 with a 3.08% coupon priced at par.

Morgan Stanley & Co. Inc. was the senior manager for the bonds (A1/A/).

Proceeds will be used to fund the Portland-Lake Oswego Transit Project, the Southwest Corridor Project and other transit projects.

Tobacco bonds ahead

Looking to upcoming deals, the Tobacco Settlement Financing Corp. of New York is slated to sell $975.555 million of series 2011 asset-backed revenue bonds during the week of June 27, said a preliminary official statement.

The offering includes $419.765 million of series 2011A bonds and $555.79 million of series 2011B bonds.

The bonds (/AA-/AA-) will be sold on a negotiated basis with Barclays Capital Inc. and Citigroup as the lead managers.

Both bonds are due 2013 to 2018.

Proceeds will be used to refund the corporation's series 2003A-1C bonds and 2003B-1C bonds.

The broad tobacco bonds market, according to Janney Montgomery Scott LLC managing director Alan Schankel, is still under pressure.

"The sector of bonds secured by tobacco settlement revenues is generally a high-risk and high-yield area with uncertainty about future payments overhanging," Schankel wrote in a weekly report.

"We retain our cautious outlook for the sector, but believe that the worst is behind, and expect consumption declines leveling out in the 4% range along with resolution of the NPM disputes to provide more consistent cash flows in the future."

Schankel noted that longer maturities of tobacco bonds have traded recently at yields between 6% and 9%.

© 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.