Municipals end weaker amid significant selling; New Jersey Transportation sells $849.2 million

By Sheri Kasprzak

New York, Aug. 20 - Municipals were weaker again on Tuesday, despite a firmer Treasuries market, as mutual funds sold off holdings on a large scale, market sources said.

"Treasuries are keeping [greater losses] at bay, but we are off by 2 to 3, maybe 4 bps," a trader said.

"There's still a great deal of illiquidity in the market, and yields are reflecting that."

New Jersey Transportation prices

Heading up the primary action Tuesday was one of the largest deals of the week. The New Jersey Transportation Trust Fund hit the market with $849.2 million of series 2013AA transportation program bonds, said a pricing sheet.

The bonds (A1/A+/A+) were sold through BofA Merrill Lynch.

The bonds are due 2015 to 2031 with term bonds due in 2033, 2036, 2039 and 2044. The serial coupons range from 2% to 5.25%. The 2033 bonds have a 5.25% coupon and priced at 102.856, and the 2036 bonds have a 55% coupon and priced at 98.653. The 2039 bonds have a 5.5% coupon and priced at 106.291, and the 2044 bonds have a 5% coupon and priced at 96.639.

One market source reached early in the session said the 2044 maturity priced during the retail order period to yield 5.19%.

Proceeds will be used to finance capital transportation projects within the state.

Texas readies $7.2 billion

Looking ahead, the State of Texas plans to come to market next week with one of the largest short-term note offerings of the year so far. The state plans to price $7.2 billion of series 2013 tax and revenue anticipation notes (MIG 1/SP-1+/F1+) on Tuesday.

The notes are due Aug. 28, 2014 and will be offered competitively.

Proceeds will be used to fulfill operating cash shortfalls during the upcoming fiscal year.

Also ahead, the City of Atlanta announced plans to price $568,735,000 of series 2013 water and wastewater revenue refunding bonds (Aa3/A+/A+) in a two-tranche deal. Wells Fargo Securities LLC and Goldman Sachs & Co. will be the senior managers for the sale.

Proceeds will be used to refund the city's series 1999A, 2001A and 2004 water and wastewater revenue bonds.

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