Municipals make gains as dealers support competitive deals; Virginia Housing brings $114.08 million

By Sheri Kasprzak

New York, July 24 - Tuesday continued a winning streak for municipals, as dealers responded positively to a heavy slate of competitive offerings, traders reported.

"Dealers seem to be coming in with strong bids on today's competitive slate," said one trader reached in the afternoon.

"In general, the supply-demand dynamic is pretty balanced. We're not getting overwhelmed, but I do think that the competitive stuff is getting some decent response."

Secondary action was improved overall, said a trader, and retail investors were seen in the market, which all helped yields improve by 3 basis points to 5 bps across the yield curve, with the most improvement seen outside of 10 years.

Virginia Housing bonds price

In primary activity, the Virginia Housing Development Authority priced $114,075,000 of series 2012 rental housing bonds, said a pricing sheet.

The offering included $39,075,000 of series 2012B tax-exempt non-AMT bonds and $75 million of series 2012C taxable bonds.

The 2012B bonds are due 2014 to 2025 with term bonds due in 2027, 2031, 2037 and 2042. The serial coupons range from 0.45% to 2.875%, all priced at par. The 2027 bonds have a 3% coupon priced at par and the 2031 bonds have a 3.25% coupon priced at par. The 2037 bonds have a 3.5% coupon priced at par and the 2042 bonds have a 3.625% coupon priced at par.

The 2012C bonds are due 2014 to 2029 with term bonds due in 2033, 2037 and 2042. The serial coupons range from 0.58% to 3.9%, all priced at par. The 2033 bonds have a 4% coupon priced at par and the 2037 bonds have a 4.1% coupon priced at par. The 2042 bonds have a 4.2% coupon priced at par.

The bonds (Aa1/AA+/) were sold competitively with Raymond James/Morgan Keegan winning the bid for both tranches. The true interest cost for the 2012B bonds was 3.39% and the TIC for the 2012C bonds was 3.88%.

"VHDA is not required to sell its debt competitively, and we don't typically comment on our choice of sales method," Hill Richardson, senior finance manager for the authority, said in an interview on Tuesday.

Proceeds will be used to finance mortgages for properties to be used as rental housing units.

Santa Clara bonds ahead

Heading up Wednesday's primary action, the Santa Clara County Financing Authority of California plans to come to market with $90.48 million of series 2012A lease revenue bonds.

The bonds (A1/AA/) will be sold competitively, and are due 2014 to 2024.

Proceeds from the offering will be used to finance various public capital improvements and projects of the Santa Clara Valley Health and Hospital System Enterprise Core Healthcare Information System.

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