Municipals end mixed, range-bound as Treasuries weaken; New York's MTA brings $500 million

By Sheri Kasprzak

New York, Oct. 31 - Municipals closed out the day mixed on Thursday, insiders said, as the primary market dried up and secondary slowed as well.

"We seem to be trailing Treasuries because there's not much left to price [this week] and trading is a bit slower than it has been," a trader said late in the session.

Bonds 10 years and in were seen somewhat firmer with some weakness seen outside of 10 years, sources said.

It was the opposite scenario for Treasuries, which saw yields rise somewhat in the shorter maturities and the 30-year bond yield fall slightly.

Mutual fund flow data shows that there was $1 billion of outflows from municipal bond mutual funds in the week ended Oct. 23, making the total outflows for 2013 so far $41 billion.

MTA yields lowered

Looking to primary action, the Metropolitan Transportation Authority of New York sold $500 million of series 2013E transportation revenue bonds.

The bonds (A2//A) were sold through Goldman Sachs & Co. and M.R. Beal & Co.

The bonds are due 2014 to 2033 with term bonds due in 2038 and 2043. The serial coupons range from 2% to 5% with 0.18% to 4.51% yields. The 2038 bonds have a 5% coupon and priced at 101.971 to yield 4.75%, and the 2043 bonds have a 5% coupon and priced at 101.335 to yield 4.83%.

Proceeds will be used to finance transit and commuter projects.

Yields were moved lower on the bonds, with adjustments of 5 basis points to 6 bps reported in maturities out to five years and 1 bp to 2 bps improvements in longer maturities, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

Connecticut bonds bumped

Additionally, the State of Connecticut's $600 million of series 2013A special tax obligation transportation infrastructure bonds were also lowered.

The bonds (Aa3//AA) were sold through Siebert Brandford Shank & Co. LLC.

The bonds are due 2014 to 2033 with 2% to 5% coupons.

Proceeds will be used to finance the construction and improvement of highways and roadways within the state.

Yields, said Schankel, were finalized at 1 bp to 4 bps lower than initial retail pricing.

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