Munis close out mixed, underperforming Treasuries; Virginia brings $236.23 million G.O. bonds

By Sheri Kasprzak

New York, Feb. 14 - Municipal yields were mixed on Thursday, underperforming Treasuries, even as secondary action picked up, traders reported.

"There are spots where yields are both up and down a touch," one trader said.

"Around 10 years, we're a little cheaper. Farther out, there are pockets of firmness. Everything else is flat for the most part. Secondary is actually picking up, but I think primary is hit or miss."

The news follows a lackluster performance on Wednesday as well.

"Muni benchmark yields moved higher Wednesday - in line with Treasuries - and in long maturities reached the highest levels since mid-September," said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"The 10-year MMA AAA index jumped 3 basis points to 1.87%, generating a 92% municipal/Treasury ratio, while the 30-year ended at 2.99% with a 93% ratio reading. Reports indicate a mixed reception for new issues and some secondary selling pressure. ICI reported that flows to municipal mutual funds continued positive in the week ending Feb. 6, but slowed to $580 million compared to the prior week's pace of $876 million."

Virginia brings G.O. bonds

Heading up the primary action, the Commonwealth of Virginia sold $236.23 million of series 2013 general obligation bonds.

The bonds (Aaa/AAA/AAA) were sold competitively with BofA Merrill Lynch winning the bid at a 2.096% true interest cost, said Janet Aylor, assistant debt management director for the commonwealth's treasury department.

The deal included $18.47 million of series 2013A G.O. bonds and $217.76 million of series 2013B G.O. refunding bonds.

The 2013A bonds are due 2014 to 2033 with 2% to 5% coupons.

The 2013B bonds are due 2016 to 2030 with coupons from 3% to 5%.

Proceeds will be used to finance revenue producing capital projects at various higher educational institutions within the commonwealth and to refund existing G.O. bonds.

"The refunding portion resulted in present value savings of $15.9 million," Aylor said.

Oregon prices bonds

Elsewhere in primary activity, the State of Oregon brought to market $211,905,000 of series 2013 G.O. bonds in four tranches.

The offering included $22,415,000 of series 2013E tax-exempt bonds, $85,675,000 of series 2013F tax-exempt refunding bonds, $98,765,000 of series 2013G tax-exempt refunding bonds and $5.05 million of series 2013H taxable bonds.

The 2013E bonds are due 2014 to 2033 with a term bond due in 2038. The serial coupons range from 2% to 4%. The 2038 bonds have a 3.375% coupon and priced at 99.575.

The 2013F bonds are due 2015 to 2032 with coupons from 4% to 5%.

The 2013G bonds are due 2016 to 2032 with 4% to 5% coupons.

The 2013H bonds are due 2014 to 2026 with coupons from 0.40% to 3.13%, all priced at par.

The bonds (Aa1/AA+/AA+) were sold through Citigroup Global Markets Inc., J.P. Morgan Securities LLC and BofA Merrill Lynch.

Proceeds will be used to finance various capital projects and to refund the state's series 2004B-C, 2005A-B, 2006A and 2007A-B certificates of participation.

© 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.