Municipals little changed as offerings price; New York City brings upsized $800 million deal

By Sheri Kasprzak

New York, Dec. 11 - The municipals market remained mostly flat on the session, despite weakness in the Treasuries market, insiders said. It was a turnaround for the market, which underperformed rallying Treasuries on Tuesday, said a trader.

"We seem to be largely ignoring Treasuries, but we are seeing some pressure in secondary," said the trader in the afternoon.

"We are seeing yields repricing lower. That seems to be setting the tone."

Treasuries, meanwhile, were weaker during the session following a Congressional agreement that could cut spending levels over the next two years and replace some budget cuts, effectively avoiding another government shutdown.

Following this move, the 10-year note yield rose by 5 basis points to end the session at 2.859%, and the 30-year bond yield climbed by almost 5 bps at 3.889%.

New York City G.O.s price

Heading up Wednesday's primary action, the City of New York hit the market with $800.05 million of series 2013G-H general obligation bonds. The offering was increased from $700 million.

The offering was comprised of $744,265,000 of series 2014G G.O. bonds and $55,785,000 of series 2014H G.O. bonds.

The 2014G bonds are due 2014 to 2025 with 2% to 5% coupons.

The 2014H bonds are due 2015 to 2033 with 2% to 5% coupons.

The bonds were sold on a negotiated basis with Jefferies & Co. as the senior manager.

One market source said Wednesday that the yields on the bonds were adjusted upward by 5 to 6 bps during the retail order period in several maturities.

Proceeds will be used to redeem existing G.O. bonds.

Hawaii DOT sells COPs

Also during the session, the Hawaii Department of Transportation came to market with $177,185,000 of series 2013 airport division lease revenue certificates of participation.

The certificates (A3/A-/A-) were sold through Morgan Stanley & Co. LLC, BofA Merrill Lynch and J.P. Morgan Securities LLC.

The COPs are due 2016 to 2028 with 3% to 5.25% coupons, according to a pricing sheet.

Proceeds will be used to finance capital improvements at the state's 15 airports.

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