Municipals slip as week's big deals price; North Texas Tollway brings $383.63 million bonds

By Sheri Kasprzak

New York, May 16 - Municipal yields were weaker on Wednesday as the bulk of the week's large offerings priced and retail investors showed little interest in the market, said traders reached during the session.

Yields were softer by 3 basis points to 5 bps in the afternoon, said one trader.

"Retail is noticeably absent, particularly today, and that has made it tougher to make any headway," the trader said.

The larger deals of the week priced Tuesday and Wednesday, and supply is expected to drop off substantially on Thursday.

"Some of the weakness seems to be in anticipation of lower supply, even though demand remains strong," the trader explained.

In other news, the State of California saw spreads widen after announcing revenue shortfalls that could cause a $16 billion budget gap for the fiscal year beginning July 1, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"[Municipal Market Advisors] noted that spreads on 30-year California bonds widened by 12 basis points Tuesday over Monday to end at 85 bps over the AAA 5% coupon benchmark," Schankel said.

New York bonds cheapen

Meanwhile, yields on the New York State Environmental Facilities Corp.'s $503.76 million series 2012A clean and drinking water revolving fund revenue bonds cheapened compared to retail pricing, said Schankel.

The bonds (Aaa/AAA/AA+) priced Tuesday through Morgan Stanley & Co. LLC and Ramirez & Co. Inc.

The bonds are due 2013 to 2029 with 2% to 5% coupons.

Yields lowered in most maturities through 10 years and cheapened in longer maturities as well, according to Schankel.

Proceeds will be used to refund existing debt issued to finance drinking and clean water clean-up.

North Texas Tollway prices

In primary action on Wednesday, the North Texas Tollway Authority came to market with $383,625,000 of series 2012C first-tier system revenue refunding bonds, said a pricing sheet.

The bonds were sold through Barclays Capital Inc. and Bank of America Merrill Lynch.

The bonds (A2/A-/) are due 2021 to 2034 with term bonds due in 2036, 2042 and 2052. The serial bonds have 5% coupons. The 2036 bonds have a 5% coupon and priced at 105.207. The 2042 bonds have a 5% coupon and priced at 104.354. The 2052 bonds have a 5.25% coupon and priced at 104.688.

Proceeds will be used to refund the authority's series 1998, 2003A and 2008H-2 bonds.

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