Munis close mixed as market seeks direction; Wisconsin brings $800 million of operating notes

By Sheri Kasprzak

New York, July 6 - Municipal yields were a mixed bag at close Wednesday. A lower-than-usual supply and lackluster secondary action made it hard for the market to find a real direction, said a trader reached during the afternoon.

Seven-year muni yields were up 7 basis points, the weakest spot in the yield curve, and 30-year yields were up almost 5 bps. Shorter maturities were down by about a basis point, while five-year muni yields were up nearly 3 bps.

"Supply is really off this week with the holiday," said the trader.

"The supply/demand balance has been pretty pivotal in determining the direction of the market, so that's thrown us off. You've also got some volatility over in Treasuries and no trading [in secondary]."

Leading the day's pricing activity was the State of Wisconsin. It brought $800 million of series 2011 operating notes in two tranches, said David Erdman, assistant capital finance director with the state's Capital Finance Office.

The notes (MIG 1//F1+) were sold competitively. Wells Fargo Bank, NA won a $750 million tranche, and Goldman Sachs & Co. took the remaining $50 million piece. The combined net interest cost was 0.22022%, said Erdman.

The state was given the option to sell its notes to various winning bidders in tranches, Erdman noted, in an effort to achieve the best possible rates.

The notes are due June 15, 2012 and have a 2% coupon priced at 101.618.

Proceeds will be used to finance general cash flow requirements.

In July 2010, the state also priced $800 million of operating notes. Those notes were due June 15, 2011 and had a 2% coupon to yield 0.5%.

Dallas brings bonds

Elsewhere during the session, the City of Dallas priced $236.3 million of series 2011 waterworks and sewer system revenue refunding bonds, said a pricing sheet.

The bonds (Aa1/AAA/) were sold through J.P. Morgan Securities LLC and M.R. Beal & Co. Inc.

The bonds are due 2013 to 2031 with term bonds due in 2036 and 2040. The serial coupons range from 3% to 5%. The 2036 bonds have a 5% coupon. The 2040 bonds have a split maturity with a 4.625% coupon and a 5% coupon.

Proceeds will be used to refund $148 million of outstanding commercial paper notes and to refund other debt.

Michigan building deal ahead

Looking to upcoming offerings, the State Building Authority of Michigan announced that it intends to price $646.425 million of series 2011 revenue and revenue refunding bonds, said a preliminary official statement.

The offering includes $433.215 million of series 2011I-A facilities program revenue and revenue refunding bonds, $154.715 million of series 2011II-A facilities program revenue and revenue refunding bonds, $12 million of series 2011I-B federally taxable facilities program revenue bonds and $46.495 million of series 2011II-B variable-rate facilities program revenue refunding bonds.

The 2011I-A bonds are due 2012 to 2031 with term bonds due in 2036, 2041 and 2046. The 2011II-A bonds are due 2012 to 2031 with a term bond due in 2037. The 2011I-B bonds are due 2012 to 2021 with a term bond due in 2031. The 2011II-B bonds are due in 2042.

The bonds (Aa3/A+/) will be sold on a negotiated basis with JPMorgan and Citigroup Global Markets Inc. as the lead managers for the fixed-rate bonds. JPMorgan is the sole manager for the variable-rate bonds.

Proceeds will be used to upgrade state buildings, including energy conservation measures, roof replacements and repairs, fire system improvements and upgrades, HVAC upgrades and window replacements.

© 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.