Muni yields rise again along with Treasuries; Virginia Housing sells mortgage bonds

By Sheri Kasprzak

New York, Dec. 12 - For the second-straight session, municipal yields softened along with Treasuries, market sources reported. Even so, the overall tone was an improvement over Tuesday.

"The overall tone is a little better, but there's still some pressure on yields," said a trader in the afternoon.

"We're getting pushed down 3, maybe 4 basis points throughout the curve. I see it as a minor correction rather than a trend that's likely to persist."

On Tuesday, yields on 10-year AAA rated bonds were up by 8 bps, market sources said. Thirty-year bonds were up 5 bps.

Virginia housing bonds price

Heading up primary action Wednesday, the Virginia Housing Development Authority came to market with $560 million of series 2012C commonwealth mortgage bonds, said a pricing sheet.

The deal included $90 million of series 2012C-STEM I bonds, $80 million of series 2012C-STEM II bonds, $80 million of series 2012C-STEM III bonds and $310 million of series 2012C-STEM IV bonds.

The STEM I bonds are due Jan. 24, 2013, and have a 0.10% coupon priced at par and the STEM II bonds are due Feb. 28, 2013, and have a 0.12% coupon priced at par. The STEM III bonds are due April 1, 2013, and have a 0.13% coupon priced at par. The STEM IV bonds are due May 23, 2013, and have a 0.14% coupon priced at par.

The bonds (Aaa/VMIG 1/AAA/A-1+/) were sold competitively with J.P. Morgan Securities LLC winning the bid with a 0.144411% true interest cost, said Brian Matt, spokesman for the authority.

The authority is not required to sell its debt competitively, said Matt, and many factors enter into the authority's decision to sell its debt competitively.

Proceeds will be used to finance mortgage loans.

Suffolk sells debt

In other primary activity, Suffolk County, N.Y., hit the market with $410 million of series 2013 tax anticipation notes, said a pricing sheet.

The notes were sold through Roosevelt & Cross Inc. The interest rate came in at 0.67%.

The notes are due Aug. 14, 2013, and have a 2% coupon priced at 100.927.

Proceeds will be used to finance government operations until property taxes are collected by the towns and remitted to the county in the summer of 2013.

"The financial markets have indicated their faith in the county's financial stability despite these uncertain economic times," said Joseph Sawicki, the county's comptroller, in a statement released Wednesday afternoon.

"The low interest rate we received today clearly trickles down to the taxpayer by making county government less expensive."

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