Munis continue to feel pinch from weak Treasuries; Tobacco Settlement brings $959.2 million

By Sheri Kasprzak

New York, June 29 - Municipals continued to suffer as Treasuries took another dive following continued turmoil in Greece, said market insiders.

Ten-year muni yields were hit the hardest, with yields up 9 basis points, said one trader. By comparison, the 10-year Treasury note was higher by 8 bps.

Across the curve, yields were up anywhere from 1 bp to 9 bps, the trader noted.

Heading up the day's pricing action, the Tobacco Settlement Financing Corp. of New York brought its long-awaited $959.195 million sale of series 2011 asset-backed revenue bonds through Barclays Capital Inc. and Citigroup Global Markets Inc.

Alan Schankel, managing director with Janney Montgomery Scott LLC, said Wednesday that the bonds priced with yields 3 bps to 5 bps lower than initial pricing.

The bonds (/AA-/AA-) are due 2013 to 2018 with 2% to 5% coupons and are backed by an appropriation pledge that helped its pricing, said Schankel.

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

Puerto Rico doubles deal

Also on Wednesday, the Commonwealth of Puerto Rico saw so much demand for its series 2011 public improvement general obligation bonds that it was able to almost double the deal.

The commonwealth sold $602.105 million of G.O. public improvement and refunding bonds. It had planned to sell $304 million of bonds and then added $298.105 million of refunding bonds.

The full deal included $304 million of series 2011A G.O. public improvement bonds, $52.19 million of series 2011D public improvement refunding bonds and $245.915 million of series 2011E public improvement refunding bonds.

The bonds (A3/BBB/BBB+) were sold through J.P. Morgan Securities LLC and Barclays Capital.

The 2011A bonds are due July 1, 2041 and have a 5.75% coupon priced at 97.216.

The 2011D bonds are due 2013 to 2020 with 3% to 5% coupons.

The 2011E bonds are due 2029 to 2032 with 5.375% to 6% coupons.

The yields for those bonds, Schankel said, were 5 bps to 13 bps lower in maturities out to 17 years than initial pricing.

"Parts of the issue carried AGM insurance, with the trifurcated 2020 maturity yielding 4.5% on the uninsured pieces and 4.125% on the insured part," Schankel noted.

Proceeds will be used to finance capital improvement projects and to refund bond anticipation notes.

Houston brings airport bonds

Elsewhere, the City of Houston priced $566.905 million of series 2011 airport system revenue refinancing bonds on Wednesday, said a term sheet.

The bonds (/A/A+) were sold through Goldman Sachs & Co.

The offering included $449.975 million of series 2011A AMT subordinate-lien refunding bonds and $116.93 million of series 2011B non-AMT subordinate-lien refunding bonds.

The 2011A bonds are due 2012 to 2026 with 3% to 5% coupons. The 2011B bonds are due 2012 to 2026 with 3% to 5% coupons.

Proceeds will be used to refund the city airport system's series 1997, 1998A-C, 2000A and 2002A-B bonds.

Harris TRANs ahead

Looking to other deals out of the Lone Star State, Harris County, Texas, announced plans to bring $450 million of series 2011 tax anticipation notes July 12, said a notice of sale.

The notes will be sold competitively with First Southwest Co. as the financial adviser.

The notes are due Feb. 29, 2012.

Proceeds will be used to finance general fund requirements ahead of the collection of certain taxes.

© 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.