Municipals continue to slide as heavy slate prices; Citizens Property brings $700 million deal

By Sheri Kasprzak

New York, May 20 – Another heavy new-issue calendar sent muni yields higher again on Wednesday, traders reported.

The triple-A 10-year benchmark yield rose by 2 basis points to 2.32%, and the 30-year yield rose by 2 bps to 3.30%.

Meanwhile, Treasuries were mixed with the 30-year yield rising by 1 bp and the five-year yield falling 3 bps.

A surge of refundings and a lack of new-money issuance remains a big theme, said Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC.

“The low interest-rate environment and the need for new infrastructure as well as upgrades and repairs are key reasons why most expect new money issuance to be relatively high,” he said in a note Wednesday.

“But it is not. That is mostly because of the challenging fiscal conditions many public finance entities are facing. Some think public-private partnerships could provide an answer. Infrastructure and P3s have been in the news a lot recently.”

Citizens sells debt

Heading up the day’s activity, the Citizens Property Insurance Corp. of Florida led new-issue action with $700 million of series 2015A-1 coastal account senior secured fixed-rate bonds as part of a larger offering. The tranche was downsized from $750 million.

A $250 million variable-rate tranche has not yet priced.

The 2015A-1 bonds (A1/A+/AA-) are due 2018, 2020, 2022 and 2025. The 2018 bonds have a 3% coupon that priced at 103.638 and a 5% coupon that priced at 108.521. The 2020 bonds have a 4% coupon that priced at 108.521 and a 5% coupon that priced 112.383. The 2022 bonds have a 4% coupon that priced at 107.947 and a 5% coupon that priced at 113.877. The 2025 bonds have a 5% coupon and priced at 114.641.

The bonds were offered through BofA Merrill Lynch.

Proceeds will be deposited into a disaster claim fund to pay hurricane catastrophe claims.

Springfield prices utility deal

Elsewhere during the day, Springfield, Mo., hit the market with $523.77 million of series 2015 public utility refunding revenue bonds, the week’s largest competitive deal.

The bonds (/AA+/AA) are due 2015 to 2036 with 3.25% to 5% coupons.

Proceeds will be used to refund the city’s series 2006 public utility revenue bonds.

North Carolina prices Garvees

In other pricing action, the North Carolina Department of the Treasurer sold $265,185,000 of series 2015 grant anticipation vehicle revenue bonds.

The bonds (A2/AA/A+) were sold through BofA Merrill Lynch.

The bonds are due 2016 to 2030 with 5% coupons.

Proceeds will be used to finance federal-aid highway projects.

Wednesday’s deal comes just days after the state’s department of transportation brought $100 million of I-77 HOT Lanes project revenue bonds through Citigroup Global Markets Inc. and Goldman Sachs & Co.

Those bonds (//BBB-) are due 2026 to 2030 with term bonds due in 2037 and 2054. The serial bonds have 5% coupons with yields from 3.72% to 4.11%. The 2037 bonds have a 5% coupon priced at 105.602 to yield 4.31%. The 2054 bonds have a 5% coupon priced at 102.792 to yield 4.65%.

The DOT plans to use the proceeds to construct, develop and equip high-occupancy toll lanes on Interstate 77.

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