Municipal yields struggle; North Carolina brings $702 million G.O. bonds cheaper than expected

By Sheri Kasprzak

New York, Feb. 20 - Municipal yields had an off day on Wednesday as some of the week's larger deals hit the market - to lackluster results, market sources said.

Even though Treasuries were improved somewhat on faltering stocks, yields at 10 years and around 30 years were up substantially, between 3 basis points and 5 bps.

A primary offering could have been one of the major drivers Wednesday. The market was watching North Carolina's $701,925,000 sale of general obligation bonds.

"Pricing was a bit cheap, and I think that everyone was watching to see where pricing would come," one trader said.

"The consensus seems to be this afternoon that it was cheaper than expected, especially for a triple-A name."

North Carolina G.O.s price

The state came to market Wednesday with $701,925,000 of series 2013 G.O. refunding bonds. The offering was upsized slightly from $691 million.

The deal included $351.97 million of series 2013C bonds and $349,955,000 of series 2013D bonds.

The 2013C bonds are due 2015 to 2026 with 3.5% to 5% coupons.

The 2013D bonds are due 2015 to 2023 with 3% to 4% coupons.

The bonds (Aaa/AAA/AAA) were sold competitively. The state controller's office did not immediately return calls for the winning bidder.

Proceeds will be used to refund the state's series 2003A-B and 2004A G.O. bonds.

New York Water sells debt

In other primary action, the New York City Municipal Water Finance Authority brought $435 million of series 2013CC second general resolution revenue bonds, said a pricing sheet.

The bonds (Aa2/AA+/AA+) were sold through senior manager Barclays.

The bonds are due in 2047 with a split maturity. The bonds have a 3.75% coupon priced at 98, a 4% coupon priced at 102.113 and a 5% coupon priced at 112.861.

"The three preliminarily priced tranches, all maturing 2047, include 3.75% at 98.5 (3.829% yield), 4% coupon at 3.65% to the call and 5% coupon at 3.4% to the call," Alan Schankel, managing director with Janney Montgomery Scott LLC, said of the retail order period on Tuesday.

Proceeds will finance the authority's ongoing capital program and repay commercial paper notes.

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