Muni yields dive, underperforming Treasuries; Maryland brings $665.14 million of G.O. bonds

By Sheri Kasprzak

New York, March 6 - Municipal yields were substantially softer on Wednesday, underperforming Treasuries, as new issues received a less-than-stellar response from investors, market sources said.

Some new offerings were having a hard time pricing at acceptable levels, said one trader.

"It's been a struggle for some [issues]," the trader said.

The series 2013B tranche of the State of Maryland sale ran into some difficulty finalizing at acceptable levels, said the trader.

Secondary action was decidedly slower, said another trader, with the primary activity dominating the market's attention.

Maryland brings G.O. bonds

Maryland's $665,135,000 sale of series 2013 general obligation bonds led the primary action.

The deal included $500 million of series 2013 first series A tax-exempt G.O. bonds and $165,135,000 of series 2013 first series B tax-exempt G.O. refunding bonds, said a pricing sheet.

The 2013A bonds are due 2016 to 2028 with 3% to 5% coupons.

The 2013B bonds are due 2017 to 2021 with 4.5% coupons.

The bonds (Aaa/AAA/AAA) were sold competitively. Citigroup Global Markets Inc. won the 2013A bonds at a 2.33% true interest cost, and J.P. Morgan Securities LLC won the 2013B bonds at a 1.087% TIC. There were six bidders for both tranches.

Proceeds will be used to finance the acquisition and construction of state facilities, to make capital grants to local governments for public schools, community colleges and jail and correctional facilities and to make matching fund loans and grants to local governments, nonprofit institutions and other entities for hospitals, cultural projects and other projects. They will also be used to refund existing G.O. debt.

Results 'satisfying'

"Today's results were very satisfying," Maryland Treasurer Nancy Kopp said in a statement released Wednesday afternoon.

"Despite uncertainty at the federal level and the greater impact that sequestration and federal budgetary constraints can have on Maryland, the market recognized the top quality of Maryland's triple A-rated debt. There was high demand, and the sale results in a very favorable and low interest rate."

The treasurer also announced that the state could conduct another bond sale as early as July or August.

Hidalgo drainage deal prices

The Hidalgo County Drainage District No. 1 of Texas sold $84 million of series 2013 unlimited tax improvement bonds, said a pricing sheet.

The bonds (Aa2/AA-/) were sold competitively with BofA Merrill Lynch winning the bid at a 2.770168% TIC, said Lora Briones, the district's financial officer.

The bonds are due 2014 to 2033 with 2.5% to 5% coupons.

The offering was postponed from early February.

"The reason the sale was postponed was more of a scheduling item [than a market issue]," Briones said Wednesday.

"We had to make sure we were going to have at least four board members in attendance for the approval."

Proceeds will be used to construct drainage improvements and acquire rights of way.

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