Municipals end Thursday cheaper along with Treasuries; Suffolk County, N.Y., sells G.O. bonds

By Sheri Kasprzak

New York, Oct. 18 - Municipal bond yields were a touch cheaper on Thursday, said traders, keeping in line with Treasuries.

"I think it's a natural correction to some very tight levels," said one trader reached during the afternoon. "We're adjusting, maybe cheaper by 2 to 3 bps across the curve."

Meanwhile, the week's largest deals were seeing strong investor interest, said Alan Schankel, managing director with Janney Montgomery Scott LLC. Those larger deals included a $293 million offering of general obligation bonds from the State of Wisconsin and $211.23 million of turnpike revenue bonds from the Pennsylvania Turnpike Commission, Schankel said.

Meanwhile, flows to municipal mutual funds were $1.3 billion on the positive side, Schankel said, in the week ended Oct. 10, although the prior week's $2.8 billion was revised downward to plus $1.3 billion.

Turnpike bonds price

The Pennsylvania Turnpike deal included $118.08 million of series 2012B turnpike subordinate revenue bonds and $93.15 million of series 2012B motor license fund-enhanced revenue bonds.

The turnpike revenue bonds are due 2013 to 2032 with term bonds due in 2037 and 2042 with 2% to 5% coupons. The 2037 bonds have a 3.75% coupon priced at 97.924, and the 2042 bonds have a 5% coupon priced at 111.302.

The motor license fund-enhanced bonds are due 2014 to 2032 with term bonds due in 2037 and 2042. The serial coupons range from 3% to 5%. The 2037 bonds have a split maturity with a 3.5% coupon priced at 98.03 and a 5% coupon priced at 112.833. The 2042 bonds have a 5% coupon priced at 112.38.

Barclays was the senior manager for the bonds (A1//AA).

Proceeds will be used to fund highway, bridge and transit capital projects.

Suffolk brings G.O.s

In other primary action Thursday, Suffolk County, N.Y., came to market with $64.03 million of series 2012B public improvement limited tax G.O. bonds, according to a pricing sheet.

The bonds (//A+) were sold competitively. Jefferies & Co. won the bid with a net interest cost of 2.96%, said Suffolk County comptroller Joseph Sawicki.

The bonds are due 2013 to 2031 with 2% to 3.125% coupons.

"This compares favorably to last fall's bond sale of $76 million at 3.2% [and] our bond sale for spring 2012 of $60.09 million at 2.96%," said Sawicki in a memo Thursday.

"Additionally, the county sold $3.5 million in bond anticipation notes at a net interest rate of 0.78%."

Proceeds will be used to finance capital improvement projects.

Catholic Health, Trinity eyed

Elsewhere, Catholic Health East and Trinity Health, based out of Pennsylvania and Michigan, respectively, have announced a non-binding letter of intent to merge into a health system that would include 82 hospitals in 21 states, said Schankel.

The news comes after Catholic Health East parent company Catholic Health Initiatives said it plans to price $1.5 billion of taxable bonds later this month through J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC. The health system said it intends to use the proceeds from the offering to finance mergers and acquisitions, as well as other expansion efforts.

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