Munis close slightly off as supply pressure eases; JobsOhio brings $1.51 billion of bonds

By Sheri Kasprzak

New York, Jan. 29 - Municipals closed with a slightly cheaper tone on Tuesday as the supply deluge began to ease, market insiders reported.

"Pressure is not as bad as it has been, but the tone is a bit weaker overall," one trader said.

New-issue supply from last week had hindered the market, the trader noted, with big balances remaining on some of the major deals priced the week before.

Even so, some bonds were seen repricing with corrections, the trader said.

JobsOhio brings $1.51 billion

Heading up the week's primary action, the JobsOhio Beverage System priced $1,510,685,000 of series 2013 statewide senior-lien liquor profits revenue bonds after some legal issues postponed the deal last week.

The deal included $404.79 million of series 2013A tax-exempt bonds and $1,105,895,000 of series 2013B taxable bonds, said a pricing sheet.

The 2013A bonds are due 2015 to 2023 with a term bond due in 2038. The serial coupons range from 3% to 5%. The 2038 bonds have a 5% coupon and priced at 113.912.

The 2013B bonds are due 2015 to 2023 with term bonds due in 2029 and 2035. The serial coupons range from 0.872% to 3.235%, all priced at par. The 2029 bonds have a 3.985% coupon, and the 2035 bonds have a 4.532% coupon; both priced at par.

The bonds (Aa2/AA/) were sold through J.P. Morgan Securities LLC and Citigroup Global Markets Inc.

Proceeds will be used to grant the system exclusive rights to operate a liquor enterprise and provide additional working capital for the enterprise.

"The major new issue of the week, JobsOhio liquor profit bonds, priced the $410 million tax-exempt portion of its $1.5 billion loan to retail orders [Monday], with the 22-year maturity, a 4% coupon to yield 3.38% to the 10-year call, 73 basis points above the MMA AAA benchmark," said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"Although the underlying credit of this issue is strong, a lawsuit challenging the constitutionality of the state's establishment of this nonprofit issuer adds uncertainty for investors."

ProgressOhio blocks deal

The deal was originally slated to price last week, but legal matters put the deal on the backburner.

ProgressOhio, a Columbus-based nonprofit organization, filed an appeal with the state supreme court to stop the bond deal. According to the complaint, ProgressOhio opposes JobsOhio because the bond deal would force the state to exceed its bond limit and because it would allow the state to lend public funds to a corporation.

JobsOhio, meanwhile, has filed a motion to dismiss the appeal saying that ProgressOhio as an organization will not be directly impacted by the offering and that the appeal is premature and refers to hypothetical events that might not occur in the future.

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