Municipals rally with good primary demand, strong secondary; West Virginia United sells debt

By Sheri Kasprzak

New York, Sept. 12 - Municipals continued their rally on Thursday, insiders reported.

Muni yields were down 4 basis points to 8 bps across the curve as new deals saw good demand and solid pricing terms.

The secondary saw more trading action that in recent weeks, said one trader.

"We're seeing a lot of block trades this afternoon, and we're still following along with yesterday's rally even though Treasuries are tapering off a bit [from earlier improvements]," the trader said.

Bids-wanted, the trader said, remain high.

Municipal-to-Treasury ratios have remained at just above 100% at 10 years for the past several sessions, said Alan Schankel, managing director with Janney Montgomery Scott LLC. On Wednesday, the 10-year M/T ratio was at 101.4%. At 30 years, the tax-free/taxable relationship was elevated at 115.8%, he noted.

"Municipal mutual funds continue to see outflows, with the latest ICI data showing an additional $2 billion in redemptions in the week ending Sept. 4, bringing the annual total of muni fund outflows to $31.5 billion," he said.

West Virginia United prices

Looking to the primary action during the session, the West Virginia Hospital Finance Authority sold $210,675,000 of series 2013A hospital revenue refunding and improvement bonds for the West Virginia United Health System Obligated Group, said a pricing sheet.

The bonds (A2/A/) were sold through Wells Fargo Securities LLC and BofA Merrill Lynch.

The bonds are due 2014 to 2019 with term bonds due in 2038 and 2044. The serial coupons range from 3% to 5% with 0.45% to 2.83% yields. The 2038 bonds have a 5.375% coupon and priced at 96.873 to yield 5.61%, and the 2044 bonds have a 5.5% coupon and priced at 97.109 to yield 5.70%.

Proceeds will be used to finance the construction, equipment, renovation and improvement of a new emergency department, 50 acute care beds, the relocation of the cardiology department and other improvements, as well as to refund the authority's series 2004A revenue bonds.

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