Municipals steady following Fed speech; Illinois Toll Highway prices upsized $500 million deal

By Sheri Kasprzak

New York, May 7 - Municipals were mostly unchanged with some firmness seen out long, market insiders said, as Federal Reserve chairwoman Janet Yellen made a speech to a Congressional committee indicating economic growth will require continued low borrowing rates, market sources said.

Municipals were little changed throughout the day as supply continued to remain low. After the speech, yields on long bonds were seen lower by 2 basis points, but the rest of the yield curve remained relatively flat.

Over in Treasuries, short maturities rallied on the Congressional speech. The five-year Treasury note yield fell by 3 bps to end the session at 1.65%, the 30-year bond yield fell by 2 bps to 3.402%, and the 10-year note yield fell by half a basis point to 2.588%.

Yellen's speech to the Congressional Joint Economic Committee indicated that recent unemployment numbers don't tell the whole story and that borrowing rates will remain low, market insiders said.

Illinois highway deal prices

Heading up the day's primary action, the Illinois State Toll Highway Authority came to market with the week's biggest offering, a $500 million sale of series 2014B toll highway senior revenue bonds. The deal was upsized from $450 million.

The bonds (Aa3//AA-) were sold through senior managers Citigroup Global Markets Inc. and Barclays.

The bonds are due 2026 to 2039 with 5% coupons, said a pricing sheet.

Proceeds will be used to finance capital improvements as part of the authority's $12.1 billion, 15-year capital improvement plan.

Inland Valley bonds price

Elsewhere during the session, the Inland Valley Development Successor Agency of California offered $240,025,000 of series 2014 tax allocation refunding bonds, said a pricing sheet. The offering was downsized from $260 million and finally hit the market after being postponed back in February due to lackluster pricing conditions.

The bonds (/A-/) were offered through Barclays.

The deal included $146.34 million of series 2014A tax-exempt bonds and $93,685,000 of series 2014B taxable bonds.

The 2014A bonds are due in 2037 and 2044. The 2037 bonds have a 5.25% coupon and priced at 109.278. The 2044 bonds have a 5% coupon that priced at 105.132 and a 5% coupon that priced at 108.285.

The 2014B bonds are due 2018 to 2024 with a term bond due in 2033. The serial coupons range from 2.745% to 4.532% and all priced at par. The 2033 bonds have a 5.5% coupon and priced at 98.

Proceeds will be used to repay outstanding loans and refund the agency's series 2011B-C bonds.

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