Muni rally continues for second session; Dallas brings $604.26 million of waterworks bonds

By Sheri Kasprzak

New York, March 19 – Municipals rallied for a second straight session, buoyed by Wednesday’s Federal Open Market Committee meeting, market sources said, with yields largely ignoring a slump for the Treasuries market.

Yields were lower by as much as 8 basis points, said one trader in the afternoon, with long bonds seeing a 13 bps drop over the past two days.

Trading action remains heavy, also helping push yields down, said the trader. Trading remained robust on Thursday, but volume hit about $13.5 billion on Wednesday, marking the busiest trading day since February.

Elsewhere, municipal-to-Treasury ratios have climbed, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

“The muni market lag served to push municipal-to-Treasury ratios to the highest levels since late 2013, 106% in 10 years and 114% in 30 years,” Schankel wrote in a note.

Elsewhere, inflows to municipal mutual funds dropped to $278 million last week from $675 million the previous week, according to the Investment Company Institute.

Dallas brings waterworks bonds

Amid the larger offerings in the market Thursday, Dallas offered $604.26 million of series 2015 waterworks and sewer revenue refunding bonds.

The deal included $453.63 million of series 2015A bonds and $150.63 million of series 2015B taxable bonds, according to a pricing sheet.

The 2015A bonds are due 2015 to 2037 with term bonds due in 2040 and 2044. The serial coupons range from 1% to 5% with 0.125% to 3.56% yields. The 2040 bonds have a 4% coupon that priced at 103.298 to yield 3.62%, and the 2044 bonds have a 5% coupon that priced at 115.386 to yield 3.26%.

The 2015B bonds are due 2019 to 2023 with 1.96% to 2.796% coupons and all priced at par.

The bonds (Aa1/AAA/) were sold through Cabrera Capital Markets LLC.

Proceeds will be used to refund the city’s series 2007, 2008, 2010 and 2011 waterworks and sewer revenue bonds.

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