Municipal yields close out mostly flat; Maryland and Puerto Rico price upsized offerings

By Sheri Kasprzak

New York, March 9 - Municipal yields were mostly flat with spots of firmness, said market insiders, as several large offerings came to market - including two big deals that were upsized.

A lack of supply in the market, said Alan Schankel, managing director with Janney Montgomery Scott LLC, has made it difficult to determine the value of municipal bonds, especially bonds down the credit scale from triple-A.

Adjustments were required for some offerings during the week, including the City of New York's $633.325 million of general obligation bonds.

"This week's NYC issue required upward yields adjustments of 5 to 7 bps from initial pricing ... not because the city name is a difficult seller (it's generally well received), but because price discovery is lacking," Schankel said.

"Without high visibility new-issue pricing, it's difficult to ascertain valuations."

Meanwhile, municipal-to-Treasury ratios have fallen dramatically since mid-January, said Schankel.

"When new issuance picks up - and it will - we expect ratios to move higher as demand for tax-frees, in a time of heightened credit concerns, is tested," he said.

Maryland brings G.O. bonds

Heading up Wednesday's heavy primary action, the State of Maryland priced and upsized $685 million of series 2011 G.O. bonds, said a pricing sheet. The offering was upped from $485 million.

The deal included $130.77 million of first series A tax-exempt bonds and $554.23 million of first series B bonds.

The first series A bonds were sold on a negotiated basis with Siebert Brandford Shank & Co. LLC as the senior manager.

The first series A bonds are due 2014 to 2026 with coupons from 2% to 5%.

The first series B bonds were priced competitively with Bank of America Merrill Lynch winning the bid.

Proceeds will be used to fund capital projects, capital grants for local governments and matching fund loans and grants for local governments, nonprofits, hospitals and other entities.

Puerto Rico upsizes deal

Another major deal was upsized on Wednesday. The Commonwealth of Puerto Rico priced $442.13 million of series 2011C public improvement refunding bonds, increased from $250 million.

The bonds (A3/BBB/BBB+) were sold through senior managers Morgan Stanley & Co. Inc. and Barclays Capital Inc.

The bonds are due 2026 to 2028, 2032, 2035 to 2037 and 2040. The coupons range from 5.25% to 6.5%.

Proceeds will be used to refund existing debt.

Georgia drives road bonds

Elsewhere, the Georgia State Road and Tollway Authority priced $344.42 million of series 2011 revenue refunding bonds (//AAA) on Wednesday, according to a term sheet.

The bonds were sold competitively with Citigroup Global Markets Inc. winning the bid.

The offering included $191.335 million of series 2011A bonds and $153.085 million of series 2011B bonds.

The 2011A bonds are due 2013 to 2021 with 4% to 5% coupons. The 2011B bonds are due 2015 to 2022 with 5% coupons.

Proceeds will be used to refund the authority's series 2003 bonds.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.