Municipals weaken again as secondary pressure mounts; New York City Transitional deal ahead

By Sheri Kasprzak

New York, June 11 - Municipal yields were off yet again on Tuesday as the market struggled against secondary pressure and a growing primary calendar shoved yields up, market sources said.

Yields, particularly outside of 10 years, were higher by as much as 7 basis points, said a trader in the afternoon.

"We're getting hit from a lot of different places," a trader said.

"We've got pressure from new supply, secondary and Treasuries."

In fact, an improvement in the Treasury market did nothing to help municipals, market sources said.

NYC Transitional deal set

Looking to upcoming offerings, the New York City Transitional Finance Authority plans to finalize pricing on its $800 million of series 2013I future tax secured bonds on Wednesday.

In an initial retail order period on Monday, the 30-year bonds priced with a 4% coupon to yield 4.1%, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

The bonds (Aa1/AAA/AAA) will be offered to institutions Wednesday through senior manager Loop Capital Markets LLC.

The bonds are due 2015 to 2039, and proceeds will be used to finance general city capital expenditures.

Coming up on Thursday, Rutgers University of New Jersey is set to price $877,005,000 of series 2013 general obligation bonds (Aa3/AA-/AA-) through Morgan Stanley & Co. LLC.

The offering will be conducted in three tranches that include both G.O. bonds and refunding bonds.

Proceeds will be used to refund some of the university's certificates of participation, lease revenue bonds, revenue refunding bonds, G.O. bonds and commercial paper.

Palm Coast sells utility bonds

In Tuesday's competitive offerings, the City of Palm Coast, Fla., offered up $85,825,000 of series 2013 utility system improvement and refunding bonds, said a pricing sheet.

Barclays won the bid for the bonds (/A+/A+) at a 3.891607% true interest cost, said Christopher Quinn, the city's chief financial officer.

The bonds are due 2013 to 2036 with 2% to 5% coupons and 0.35% to 4.45% yields.

"We were not required to sell competitively but felt the market conditions were good for a competitive sale," Quinn said in an interview Tuesday.

"Net present value savings on the refunding portion is $6,956,379."

Proceeds will be used to finance improvements to the city's wastewater utility system and to refund its series 2003 utility system revenue bonds.

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