Municipals softer as bid/ask spreads widen; New York City offers $950 million G.O. bonds

By Sheri Kasprzak

New York, May 22 - Municipals were once again a bit softer, but secondary trading pressure seemed to dissipate, market sources reported. Yields were 1 basis point to 3 bps higher in spots, said one trader, but the market didn't seem to be reacting to Treasuries.

"Bid/ask spreads are wider," said a trader.

"That seems to be the cause [of the weakness]."

New York G.O. bonds price

Heading up the day's primary action, the week's largest deal priced for institutional investors, but with yields adjusted higher, market sources said.

City of New York priced $950.01 million of series 2013 general obligation bonds, said a pricing sheet.

The deal included $242,315,000 of series 2013I G.O. bonds and $707,695,000 of series 2013J G.O. bonds.

The 2013I bonds are due 2013 to 2025 with coupons from 2% to 5%. The 2013J bonds are due 2014 to 2025 with a term bond due in 2027. The serial coupons range from 4% to 5%. The 2027 bonds have a 3% coupon and are priced at par.

The bonds (Aa2//AA) were sold through BofA Merrill Lynch.

"New York City adjusted yields in most maturities 5 basis points higher in day two of the retail order period on its $945 million general obligation issue," said Alan Schankel, managing director with Janney Montgomery Scott LLC, just before the bonds priced Wednesday for institutions.

Proceeds will be used to refund outstanding G.O. bonds for a debt service savings and to fix out a portion of the city's outstanding variable-rate demand bonds.

Dasny sells school bonds

Also out of New York, the Dormitory Authority of the State of New York hit the market with $117,275,000 of series 2013 school districts revenue bond financing program revenue bonds in a five-tranche offering. The authority intends to use the proceeds from the deal to finance school district and school facility improvements, as well as to refinance bond anticipation notes.

The deal included $35.27 million of series 2013A bonds (/A+/A+), $7.61 million of series 2013B bonds (/AA/A+), $28.43 million of series 2013C bonds (/AA-/A+), $6,305,000 of series 2013D bonds (Aa3//A+) and $39.66 million of series 2013E bonds (/A+/A+).

The 2013A bonds are due 2014 to 2028 with 2% to 5% coupons and 0.5% to 3.3% yields.

The 2013B bonds are due 2014 to 2033 with term bonds due in 2038 and 2042. The serial coupons range from 2% to 4%, and yields range from 0.45% to 3.57%. The 2038 bonds have a 4% coupon priced at 102.115 to yield 3.75%, and the 2042 bonds have a 4% coupon priced at 101.346 to yield 3.56%.

The 2013C bonds are due 2014 to 2032 with coupons from 2% to 5% and yields from 0.5% to 3.56%.

The 2013D bonds are due 2014 to 2033 with term bonds due in 2038 and 2042. The serial coupons range from 3% to 4%, and yields range from 0.5% to 3.62%. The 2038 bonds have a 4% coupon and priced at 101.687 to yield 3.8%. The 2042 bonds have a 4% coupon and priced at 100.921 to yield 3.89%.

The 2013E bonds are due 2014 to 2028 with coupons from 2% to 5% and yields from 0.5% to 3.4%.

The bonds were sold through Raymond James/Morgan Keegan and Roosevelt & Cross Inc.

L.A. Water offers debt

Another major deal came to market Wednesday. The Los Angeles Department of Water and Power sold $452,145,000 of series 2013B power system revenue bonds, said a pricing sheet.

The bonds (Aa3/AA-/AA-) were sold through Goldman Sachs & Co.

The bonds are due 2017 to 2032 with 3% to 5% coupons.

Proceeds will be used to finance capital improvements included in the department's integrated resource plan.

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