Municipals hold steady despite weaker Treasuries; Louisiana sells $496.44 million G.O. bonds

By Sheri Kasprzak

New York, Feb. 11 - Municipals outperformed Treasuries on Tuesday, holding mostly steady with some firmness seen among high-grade munis, said market sources.

"We're not really responding that much to Treasuries; we're mostly flat," a trader said in the afternoon.

Secondary action was again light, said another trader, with a lot of activity seen in Puerto Rico paper.

This comes in spite of a Fitch Ratings downgrade of Puerto Rico general obligation and related bonds to BB from BBB-. The agency downgraded the debt after Moody's Investors Service and Standard & Poor's Ratings also downgraded the commonwealth to below investment grade.

Fitch cuts Puerto Rico

"Fitch placed the G.O. and related ratings on Negative Watch in November 2013, citing the challenge facing the commonwealth in maintaining financial flexibility in light of the deterioration in capital markets access," said Fitch analysts Laura Porter, Karen Krop and Douglas Offerman.

"Recent downgrades have triggered new liquidity requirements and lowered expectations for the market available for the commonwealth's debt going forward, though there have been no significant negative developments regarding the commonwealth's finances or economy since November. In the context of other credit challenges related to a weak economy and elevated liability levels, Fitch believes that these additional hurdles preclude the commonwealth maintaining an investment-grade credit profile."

Louisiana brings debt

Heading up Tuesday's primary action, one of the week's largest deals hit the market. The State of Louisiana priced $496.44 million of series 2014 G.O. bonds.

The deal included $347,165,000 of series 2014A G.O. bonds and $149,275,000 of series 2014B taxable G.O. bonds, said a pricing sheet.

The 2014A bonds are due 2017 to 2034 with 4% to 5% coupons and 0.51% to 4.00% yields.

The 2014B bonds are due 2015 to 2020 with 0.22% to 2.5% coupons and yields from 0.22% to 2.15%.

The bonds (/AA/AA) were sold competitively with J.P. Morgan Securities LLC winning the bid for the 2014A bonds at a 3.5% true interest cost and Wells Fargo Securities LLC winning the bid for the 2014B bonds at a 1.5% TIC.

Proceeds will be used to finance a variety of capital outlay projects.

The offering comes just as the state also announced plans to come to market again with $201.68 million of series 2014A highway improvement revenue bonds (Aa3/AA-/AA-) through lead manager Citigroup Global Markets Inc.

The bonds are due 2015 to 2034, and proceeds from the sale will be used to finance capital improvements to state highways.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.