Municipals end firmer as demand meets supply; Rochester brings $200 million Mayo Clinic bonds

By Sheri Kasprzak

New York, March 28 - Municipal yields firmed yet again in trading Wednesday, particularly in the short-to-intermediate range, said market insiders.

Yields between 5 to 15 years were down by 2 to 3 basis points with the rest of the yield curve mostly flat.

"We're seeing a combination of positive factors, including decent market reception, good bids, and good absorption," said one trader reached during the afternoon.

"There's a good supply-demand flow going on right now, and that seems to be helping yields. New pricings are coming out fairly strong, and the demand for them has been good. We'll take it while it lasts."

Mayo Clinic brings bonds

Heading up the day's negotiated offerings, the City of Rochester, Minn., brought to market $200 million of series 2012 health care facilities revenue bonds for the Mayo Clinic, said a term sheet.

The bonds (Aa2/AA/) were sold through Wells Fargo Securities LLC and Bank of America Merrill Lynch.

The bonds are due Nov. 15, 2041, and have a split maturity with a 4% coupon priced at 95.807 and a 4.25% coupon priced at par.

Proceeds will be used to finance the construction, acquisition and equipment of a proton beam radiation therapy center at the Mayo Clinic-Methodist Hospital, as well as to renovate and construct other properties operated by the clinic.

The last time the city came to market with Mayo Clinic bonds was in May 2011, when it sold $285 million of revenue bonds with coupons from 4% to 4.5%.

Providence's 'final option'

Meanwhile, the City of Providence could seek bankruptcy protection to handle its budget deficit, according to Alan Schankel, managing director with Janney Montgomery Scott LLC.

Even so, Providence's mayor, Angel Taveras, said in a statement that bankruptcy is a "final option" and that he would do everything possible to avoid filing, according to Schankel.

"As we noted in a January report on the city, Providence is taking significant steps toward balancing its budget and resolving structural issues, although hurdles remain," Schankel wrote.

Moody's Investors Service dropped the city's debt to Baa1 from A3 and Fitch cut its debt to BBB from A.

Oklahoma City sells G.O.s

In other primary action, the City of Oklahoma City brought to market a $50 million sale of series 2012 general obligation bonds.

The bonds (Aaa/AAA/) were sold competitively with Citigroup Global Markets Inc. winning the bid, said Craig Freeman, the city's finance director in an interview Wednesday. The true interest cost came in at 3.005274%.

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

"We received six bids and the winning bidder was Citigroup Global Markets Inc., at a true interest cost of 3.005274%," said Freeman.

"The second lowest bidder was Bank of America Merrill Lynch who offered a true interest cost of 3.007975%. The city is required by state law to competitively sell new money G.O. bond sales."

According to Freeman, the city sold G.O.s in 2011 at a 3.6% TIC.

Proceeds will be used to finance the construction, improvement and repair of city streets; construction, improvement and repair of city bridges; construction and installation of traffic control improvements; improvement of parks, playgrounds, community centers, swimming pools, piers, public docks, gymnasiums and other parks and recreation facilities; and the construction of fire stations, fire training facilities and other fire department facilities, as well as new police facilities.

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