Municipal yields end flat; Port Authority of New York and New Jersey prices $595 million

By Sheri Kasprzak

New York, Dec. 6 - Municipal yields were flat yet again on Thursday as new issue volume tapered off, despite firmer Treasuries, traders reported.

"It's been quiet," said one trader.

"The market could be waiting for employment numbers, but it's just sluggish overall. Trading is light."

Demand, meanwhile, remains strong, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"Demand has generally been strong for the week's slate of new issues, with many maturities trading better in secondary," he said.

"Evidence of this demand is found in another strong count of weekly inflows to municipal mutual funds - $1.3 billion in the week ending Nov. 28."

Port Authority issues debt

In primary action, the Port Authority of New York and New Jersey sold $595 million of consolidated bonds.

"The tax-frees had a retail structure on longer maturities, with 3% at 100 in 20 years and 3.25% to yield 3.4% in 30 years," said Schankel of the deal.

The deal included $425 million of series 175 tax-exempt bonds and $170 million of series 176 taxable bonds.

The series 175 bonds are due 2013 to 2038 with 3% to 5% coupons. The 2042 bonds have a 3.25% coupon priced at 97.194.

The series 176 bonds are due 2013 to 2022 with 0.40% to 2.5% coupons.

The bonds (/AA-/AA-) were sold competitively with Bank of America Merrill Lynch winning the series 175 bonds with a 2.979743% true interest cost and Citigroup Global Markets Inc. winning the series 176 bonds with a 1.722440% TIC.

Proceeds will be used to finance transit projects.

Kansas DOT sells bonds

Also during the session, the Kansas Department of Transportation brought $200 million of series 2012C highway revenue bonds, according to a pricing sheet.

The bonds (//AA+) were sold competitively with Bank of America Merrill Lynch winning the bid, said Steve Swartz, spokesman for the department. The TIC was 2.15%.

The bonds are due 2015 to 2032 with 4% to 5% coupons.

"The agency is not required to sell debt competitively," said Swartz Thursday.

"A combination of a fairly simple bond structure and low interest-rate environment were conditions leading to the agency's decision to sell competitively."

Proceeds will be used to construct, reconstruct, maintain and repair state highways; preserve and revitalize rail systems in the state; improve public transit facilities for senior citizens, the disabled and the general public; and make improvements to general aviation facilities in the state.

College bonds sold

Elsewhere, the Massachusetts State College Building Authority priced $153.84 million of series 2012C project revenue bonds, according to a pricing sheet.

The bonds (Aa2/AA/) were sold competitively with Wells Fargo Securities LLC winning the bid with a 2.69% TIC, said Edward Adelman, executive director of the authority, Thursday.

The bonds are due 2014 to 2036 with term bonds due in 2038 and 2042. The serial coupons range from 2% to 5%. The 2038 bonds have a 3% coupon priced at 97.991, and the 2042 bonds have a 3% coupon priced at 97.

"There is a presumption to sell debt competitively," said Adelman.

"However, depending on the credit, size, market and many other factors, public agencies have the ability to issue a waiver to sell on a negotiated basis."

Proceeds will be used to make renovations, improvements and expansions to several colleges within the commonwealth.

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