Yields suffer more weakness as Treasuries slide; Illinois Finance, Hawaii Pacific bring bonds

By Sheri Kasprzak

New York, May 27 - Municipal yields took a few hits in the beating Treasuries received Thursday, with yields reportedly up 3 to 5 basis points across the curve.

"It wasn't pretty," said one trader.

"Yields are up anywhere from 3 to 5 bps, and that's across the curve. Short bonds are probably better than long. Longer bonds, everywhere outside of 10 years, seem to be getting hit the worse. Treasuries were really struggling today, so that's probably why we're struggling."

Meanwhile, secondary action remained light, the trader reported.

Amid the light action, the City of Seattle's recently priced light and power revenue refunding bonds were moving. The 5% 2017 bonds were seen at 3.038% Thursday afternoon, more than 1 bp higher than pricing.

Elsewhere, the Health and Educational Facilities Authority of the State of Missouri's revenue bonds sold Wednesday for Saint Luke's Health System were moving. The 5% 2040s were trading Thursday afternoon at 4.838%. The bonds priced Wednesday at 5.18%.

Chicago art bonds price

Meanwhile, in Thursday's primary action, the Illinois Finance Authority priced $105.765 million in series 2010A revenue bonds for the Art Institute of Chicago, according to a term sheet.

"We're pleased with the pricing," said one sellsider connected to the offering.

"We feel that with their rating, it's right in line with where we expected it to come. It's in line with their most recent pricing [on May 5]."

The institute priced $53.955 million in bonds earlier in the month. The 2015 bonds were priced to yield 2.2%

Thursday's bonds (A1/A+/) are due 2015 and 2040. The 2015 bonds have a 5% coupon and priced at 111.362 to yield 2.44%. The 2040 bonds have a 5.25% coupon and priced at 102.441 to yield 4.93%.

J.P. Morgan Securities Inc. and Loop Capital Markets LLC were the senior managers.

Proceeds will be used to redeem the institute's series 1992, 1995 and 1996 bonds as well as repay a line of credit.

The authority, which has headquarters in Chicago, provides financing for nonprofit organizations.

Hawaii hospital sells

In other news, the Hawaii Pacific Health Obligated Group sold $101.94 million in series 2010A special purpose revenue bonds on Thursday, said a pricing sheet.

The bonds (A3/BBB+/) were sold through Morgan Stanley & Co. Inc.

The bonds are due 2014 to 2021 with term bonds due 2030 and 2040. Coupons range from 3% to 4.625%. The 2030 bonds have a 5.25% coupon, priced at 97.574, and the 2040 bonds have a 5.5% coupon, priced at 97.135.

Proceeds from the sale will be used to refund the health system's series 2005A and 2009A bonds.

The obligated group, which is based in Honolulu, operates the Kapi'olani Medical Center for Women and Children and its related organizations.

Dasny sells $285 million

Also on Thursday, the Dormitory Authority of the State of New York sold $285 million in series 2010A revenue bonds for Cornell University, according to a pricing sheet.

The full details of the offering were unavailable by press time Thursday. The bonds (Aa1/AA/) were sold through Bank of America Merrill Lynch and Citigroup Global Markets Inc.

The bonds are due 2032, 2035 and 2040 with 4% to 5% coupons. The yields were not immediately available.

Proceeds will be used to refinance commercial paper and fund the construction of a medical research building.

The Albany-based authority provides financing to qualified nonprofit entities in the state. The university is located in Ithaca.

Connecticut plans sale

Looking to upcoming offerings, the State of Connecticut is expected to sell $600 million in series 2010 general obligation bonds, said a preliminary official statement.

The sale includes $200 million in series 2010B G.O. bonds and $400 million in series 2010C G.O. refunding bonds.

The bonds will be sold on a negotiated basis with JPMorgan as the senior manager.

The 2010B bonds are due 2011 and 2014 to 2018. The 2010C bonds are due 2011 to 2023.

Proceeds from the sale will be used to finance capital expenditures and refund existing debt.

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