Munis post gains as Treasuries falter; Minnesota prices $767.56 million of delayed G.O. bonds

By Sheri Kasprzak

New York, Oct. 24 - Municipals improved for the third straight session, market sources reported, as secondary activity was robust and the week's new issues finished pricing.

Yields on high-grade tax-exempt municipals were lower by 3 basis points to 5 bps. A market source even noted that Puerto Rico bonds in particular rallied, dropping 10 bps to 20 bps. Another market insider noted earlier in the week that after the commonwealth's webcast last week, yields have fallen substantially.

Minnesota brings G.O. bonds

After delaying the offering from Tuesday, the State of Minnesota hit the market with $767,555,000 of series 2013 general obligation state bonds. The deal was delayed, said John Pollard, spokesman for the Minnesota Management and Budget Board, because of the large supply of offerings in the market on Tuesday.

The offering included $282.6 million of series 2013D G.O. state various purpose bonds, $112 million of series 2013E G.O. state trunk highway bonds and $372,955,000 of series 2013F G.O. state various purpose refunding bonds.

The 2013D bonds are due 2014 to 2033 with 3.5% to 5% coupons and 0.17% to 4.05% yields.

The 2013E bonds are due 2014 to 2033 with coupons from 2% to 5% and yields from 0.17% to 4.04%.

The 2013F bonds are due 2016 to 2026 with coupons from 3.125% to 5%.

The bonds were sold competitively. Pollard said Thursday afternoon that the specific terms of the offering were still being finalized.

"We are not required to sell competitively," Pollard noted Thursday afternoon.

Proceeds will be used to finance capital expenditures, the construction of state trunk highway projects and to refund existing G.O. debt.

Catholic Health offers bonds

Also during the session, the Catholic Health Initiatives priced $600.6 million of series 2013A revenue bonds in four tranches.

The offering included $254,765,000 of series 2013A Colorado Health Facilities Authority revenue bonds, $205.09 million of series 2013A Chattanooga Health, Educational and Housing Facility Board revenue bonds, $78,535,000 of series 2013A Kentucky Economic Development Finance Authority revenue bonds and $62.21 million of series 2013A Washington Health Care Facilities Authority revenue bonds.

Yields from 5.07% to 5.46%

The Colorado Health bonds are due 2033, 2040 and 2045. The 2033 bonds have a 5% coupon and priced at 99.143 to yield 5.07%, and the 2040 bonds have a 5.25% coupon and priced at 98.042 to yield 5.39%. The 2045 bonds have a 5.25% coupon and priced at 96.866 to yield 5.46%.

The Chattanooga bonds are due 2033, 2040 and 2045. The 2033 bonds have a 5% coupon and priced at 99.143 to yield 5.07%, and the 2040 bonds have a 5.25% coupon and priced at 98.042 to yield 5.39%. The 2045 bonds have a 5.25% coupon and priced at 97.011 to yield 5.45%.

The Kentucky bonds are due 2040 and 2045. The 2040 bonds have a 5.375% coupon and priced at 99.784 to yield 5.39%, and the 2045 bonds have a 5.25% coupon and priced at 96.866 to yield 5.46%.

The Washington Health bonds are due 2040 and 2045. The 2040 bonds have a 5.25% coupon that priced at 98.042 to yield 5.39% and a 5.375% coupon that priced at 99.784 to yield 5.39%. The 2045 bonds have a 5.75% coupon and priced at 103.143 to yield 5.31%.

The bonds (A1/A+/A+) were sold on a negotiated basis with Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC.

Proceeds will be used to finance or refinance the construction, acquisition, rehabilitation, renovation and improvement of Catholic Health facilities.

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