Municipals end weaker again as major offerings hit market; Bay Area Toll brings $900 million

By Sheri Kasprzak

New York, July 24 - Municipal yields were off again on Wednesday as Treasuries hit some turbulence, market sources said.

Thirty-year AAA municipal yields rose about 7 basis points after gaining 8 bps on Tuesday, said a trader in the afternoon. Short bonds weren't immune from the weakness either, with 10-year yields up about 5 bps.

"A variety of customer bid-wanted lists were reported across the curve," said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"Lipper fund flows for the post-Detroit bankruptcy period will be released [Wednesday]. We expect outflows, which registered about $1.5 billion last week, to diminish this week, but concern about Detroit's fate and resulting precedents may heighten concern with fund investors leading to further liquidations."

BATA upsizes bond deal

Leading the day's primary action, the Bay Area Toll Authority of California hit the market with $900 million of series 2013S-4 San Francisco Bay Area subordinated toll bridge revenue bonds. The deal was upsized from $750 million.

The bonds (A1/A+/) were sold through senior managers BofA Merrill Lynch and Citigroup Global Markets Inc.

The bonds are due 2027 to 2033 with term bonds due in 2038, 2043, 2048 and 2053. The serial bonds have a 5% coupon. The 2038 bonds have a 5% coupon and priced at 99.292. The 2043 bonds have a 5% coupon and priced at 98.023. The 2048 bonds have a 5.125% coupon priced at 97.229 and a 5.25% coupon priced at 99.203. The 2053 bonds have a 5.25% coupon and priced at 96.757.

Proceeds will be used to fund capital projects.

Maryland offers G.O. bonds

Elsewhere during the session, the State of Maryland sold $475 million of series 2013 state and local facilities loan of 2013 general obligation bonds, said a pricing sheet.

The deal includes $435 million of series 2013A tax-exempt bonds and $40 million of series 2013B taxable bonds.

The 2013A bonds are due 2017 to 2028 with 4% to 5% coupons and 1.04% to 3.81% yields.

The 2013B bonds are due 2016 to 2017 with 0.95% to 1.4% coupons and 0.95% to 1.48% yields.

The bonds (Aaa/AAA/AAA) were sold competitively. J.P. Morgan Securities LLC won the series 2013A bonds at a 3.155% true interest cost, and Jefferies & Co. LLC won the series 2013B bonds at a 1.176% TIC.

The net premium on the series 2013A bonds was $49,236,688, and the discount on the 2013B bonds was $79,022.

"Today's results were very satisfying, particularly in light of a challenging marketplace," Maryland treasurer Nancy K. Kopp said in a statement.

Proceeds will be used to finance capital facilities and to finance capital grants to local governments for public schools, community colleges and jails.

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