Municipals continue firming trend as Treasuries weaken; Connecticut sells transportation bonds

By Sheri Kasprzak

New York, Oct. 30 - Municipals ended firmer on Wednesday for the second straight session despite some rockiness in the Treasuries market, sources reported.

Spotty firmness was seen during the session as demand for high-grade names improved the tone of the market early on. New offerings were well-received, market sources said.

Meanwhile, Treasuries initially firmed but lost ground following the October meeting of the Federal Open Market Committee.

As expected, the Federal Reserve chose to maintain its bond-buying program, but some market sources said in the afternoon that this could indicate that the Fed is just that much closer to a taper than it was at its September meeting.

The 10-year Treasury note yield rose by 3 basis points during the session to close at 2.534%, and the 30-year bond yield gained 2 bps to end at 3.639%. The five-year note yield climbed by 2 bps to 1.312%.

Connecticut prices

Heading up the day's primary action, the State of Connecticut brought to market $600 million of series 2013A special tax obligation transportation infrastructure bonds, said a pricing sheet.

The bonds (Aa3//AA) were sold through Siebert Brandford Shank & Co. LLC.

The bonds are due 2014 to 2033 with 2% to 5% coupons.

Proceeds will be used to finance the construction and improvement of highways and roadways within the state.

Chandler details deal

Elsewhere, the City of Chandler, Ariz., released additional details on its $104.5 million sale of series 2013 excise tax revenue obligations. The deal size was cut from $110 million.

The bonds (Aa1/AAA/AAA) were sold competitively. Barclays won the bid at a 3.590717% true interest cost.

The bonds are due 2015 to 2033 with 4% to 5% coupons and 0.30% to 4.17% yields.

Proceeds will be used to finance capital improvements within the city, including water and wastewater system improvements.

"After resizing the numbers slightly, the final par amount was $104.5 million, with a net premium of $8,274,890," said Dawn Lang, management services director for the city.

"...The city's last bond deal was in 2011 during a very different market environment, making it very difficult to try to compare. But ... the final yields on the city's ETROs came in below this benchmark throughout most of the 20-year structure."

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