Municipals end day weaker with Treasuries; Washington hits market with $224 million G.O. deal

By Sheri Kasprzak

New York, Oct. 10 - Municipals were again weaker as the secondary market just couldn't get off the ground and as Treasuries continued to battle against headlines, insiders said.

With Treasuries hitting some bumps because of the ongoing battle over raising the debt ceiling in Washington and secondary still not getting much response from investors, municipal yields were seen higher by 1 to 2 basis points, said a trader.

"Trading is still light," he said.

"I think a lot of investors are still skittish about how the shutdown will impact munis. It's still unclear to a lot of us."

Looking to Treasuries, the 30-year bond got a boost after a successful auction of $13 billion 30-year bonds.

The 30-year bond yield fell by a basis point to end at 3.732% after the auction. The Treasury Department auctioned the 3.625% bonds at a 3.758% yield.

The 10-year note yield rose by 3 bps to close at 2.693%, and the five-year note yield edged a touch higher to 1.432%.

Washington brings G.O. bonds

Moving to primary activity, the State of Washington priced $223.88 million of series R-2014 general obligation bonds.

The offering includes $117,905,000 of series R-2014A various purpose G.O. refunding bonds and $105,975,000 of series R-2014B motor vehicle tax G.O. refunding bonds.

The bonds (Aa1/AA+/AA+) were sold competitively with J.P. Morgan Securities LLC taking the series R-2014A bonds at a 1.37% true interest cost and the series R-2014B bonds at a 1.43% TIC.

The series R-2014A bonds are due 2014 to 2020 with 2% to 5% coupons and 0.18% to 1.92% yields.

The series R-2014B bonds are due 2014 to 2021 with 2% to 5% coupons and 0.18% to 2.24% yields.

Proceeds will be used to refund the state's series R-2004A and R-2004C various purpose G.O. refunding bonds and refund the series R-2004B and series R-2004D motor vehicle tax G.O. refunding bonds.

The state will save $8.3 million from the refunding, said a statement from state treasurer James McIntire.

Wisconsin sells debt

In other state G.O. news, the State of Wisconsin brought to market $584,475,000 of series 2013-2014 G.O. refunding bonds.

The deal includes $402,715,000 of series 2013-1 G.O. refunding bonds and $181.76 million of series 2014-1 G.O. refunding bonds.

The bonds (/AA/AA) were sold through senior managers Citigroup Global Markets Inc. and Ramirez & Co. Inc.

The 2013-1 bonds are due 2016 to 2033 with 2% to 5% coupons. The 2014-1 bonds are due 2015 to 2020 with 5% coupons.

Proceeds will be used to advance and current refund existing G.O. debt.

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