Muni yields climb slightly in sympathy with Treasuries; Massachusetts prices in two tranches

By Sheri Kasprzak

New York, March 20 - Municipal yields were up slightly on Wednesday along with Treasuries as the largest deals of the week priced, traders reported.

Secondary action was elevated, but new issues still dominated the market.

"We are seeing some [new issues] bumped in repricing," one trader said.

"Trading is more active, but new deals are taking away some of the attention."

Looking to ratings news, downgrades were down 26% for U.S. public finance in 2012, said Sarah Repucci, senior director with Fitch Ratings, in a report released Wednesday.

"For all U.S. public finance sectors in aggregate, the number of upgrades and downgrades decrease in 2012 from 2011," Repucci wrote.

"Fitch reported 198 downgrades in 2012, a 26% decrease from 2011 (268). Upgrades decreased to 84 in 2012 from 130 in 2011."

The downgrade-to-upgrade ratio, Repucci wrote, was 2.4 to 1, increased from 2.1 to 1 in 2011.

Additionally, Fitch reported a decrease in negative rating outlooks to 232 in 2012 from 306 in 2011. The number of positive rating outlooks also decreased to 61 from 68 in 2011.

Negative rating watches increased to 49 from 29. This increase, Repucci said, was largely due to changes in Fitch's charter school sector criteria.

Downgrades, Repucci said, account for a small percentage of total public finance rating actions.

"The number of ratings that were affirmed constituted the majority of rating actions (82%) during the year," she wrote.

"Additionally, 91% of rating outlooks were stable at the end of 2012."

Massachusetts sells G.O. bonds

Leading the day's primary action, the Commonwealth of Massachusetts came to market with $525 million of series 2013 general obligation bonds, said a pricing sheet.

The deal included $450 million of series 2013A consolidated loan G.O. bonds and $75 million of series 2013B taxable consolidated loan G.O. bonds.

The 2013A bonds are due 2017 to 2020 and 2032 to 2043 with 4% to 5% coupons. The 2013B bonds are due 2014 to 2018 with 0.29% to 1% coupons.

The bonds (Aa1/AA+/AA+) were sold competitively. BofA Merrill Lynch won the bid for the 2013A tax-exempt bonds at a 3.38% true interest cost. Citigroup Global Markets Inc. took the series 2013B taxable bonds at a 0.78% TIC.

Proceeds will be used to finance capital projects for the commonwealth.

There were nine bidders for the tax-exempt portion of the sale and 14 bidders for the taxable bonds, according to the state treasurer's office.

New Jersey Turnpike prices

Elsewhere during the session, the largest deal of the week priced. The New Jersey Turnpike Authority sold $1.4 billion of series 2013 turnpike toll revenue bonds, said a pricing sheet.

The bonds (A3/A+/A) were sold through senior manager J.P. Morgan Securities LLC.

The bonds are due 2016 to 2033 with term bonds due in 2038 and 2043. The serial coupons range from 3% to 5%. The 2038 bonds have a 5% coupon and priced at 109.354. The 2043 bonds have a split maturity with a 4% coupon priced at par, a 4% coupon priced at 98.285 and a 5% coupon priced at 108.703.

Proceeds will be used to finance capital projects.

NYC Transitional Finance too

In other news, the New York City Transitional Finance Authority priced $1 billion of series 2013 future tax secured subordinated bonds, said a pricing sheet.

The deal included $650 million of series 2013F-1 tax-exempt bonds, $100 million of series 2013F-2 taxable qualified school construction bonds, $83.03 million of series 2013G tax-exempt bonds and $166.97 million of series 2013H taxable bonds.

The 2013F-1 bonds are due 2015 to 2034 with term bonds due in 2036 and 2040. The serial coupons range from 3% to 5%. The 2036 bonds have a 5% coupon and priced at 113.934, and the 2040 bonds have a 4% coupon and priced at 101.127.

The 2013F-2 bonds are due Feb. 1, 2038, have a 4.2% coupon and priced at 103.281.

The 2013G bonds are due 2013 to 2028 with coupons from 2% to 5%.

The 2013H bonds are due 2014 to 2031 with coupons from 2% to 5%.

The bonds (Aa1//AAA) were sold through BofA Merrill Lynch, JPMorgan, Wells Fargo Securities LLC, Barclays and Morgan Stanley & Co. LLC.

Proceeds will be used to finance general city capital expenditures, including the rehabilitation or repair of public schools and land acquisition.

© 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.