Munis close slightly firmer; Illinois brings $1.79 billion; volume is 76% ahead of 2011's pace

By Sheri Kasprzak

New York, May 1 - Municipals rounded out the session on a slightly firmer note, said market insiders, as the largest offering of the week priced.

"Looks like the middle of the curve is doing some better," said one trader reached during the afternoon.

"One to two basis points firmer. Bids were strong, so that's driving us."

The State of Illinois came to market with $1,791,440,000 of series May of 2012 general obligation refunding bonds. The offering was well received but slightly downsized from $1.8 billion.

"Investors were coming out of the woodwork," said one trader. "I haven't seen anything like it in a long time."

Illinois bonds price

The Illinois G.O. bonds (A2/A+/A) were sold through senior managers Jefferies & Co. and BMO Capital Markets LLC.

The bonds are due 2013 to 2025 with 1.6% to 5% coupons.

Proceeds will be used to refund existing G.O. debt.

The Illinois offering, according to Janney Montgomery Scott LLC managing director Alan Schankel, is just one example of issuers taking advantage of a low-interest-rate environment.

"For example, the Illinois issue scheduled for pricing today, with Janney as co-manager, is a refunding issue which is expected to generate about $100 million in net present value savings," Schankel said Tuesday morning before the deal priced.

Issuance driven by refinancing

In the broader market on Tuesday, Schankel said that so far in 2012, new issue volume is 76% ahead of 2011's pace.

"Total municipal new issue volume thus far in 2012 is 76% ahead of last year's pace, driven by a strong refinancing surge as issuers take advantage of low interest rates to lock in savings," Schankel said.

"New money issuance, on the other hand, is only 12% higher, reflecting the modest pace of new capital projects in a budget-paring era."

Louisiana deal ahead

Looking to Wednesday's new offerings, the State of Louisiana will bring the week's second-largest deal when it comes to market with $515,105,000 of series 2012-1 gasoline and fuels tax revenue refunding bonds.

The bonds (Aa1//AA-) will be sold through Citigroup Global Markets Inc.

Proceeds from the bonds, which are due 2013 to 2032, will be used to current refund the state's series 2002A revenue bonds and advance refund its series 2005A and 2006A revenue 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.