Municipals mixed as Treasuries weaken on Greece news; New York Liberty sells $1.23 billion

By Sheri Kasprzak

New York, Nov. 3 - Municipals ended the session mixed Thursday as Treasuries took a hit following news that Greece will not actually hold a referendum on Europe's planned bailout, market insiders said.

Stocks improved, but Treasuries weakened with municipals following along, said one trader.

The middle of the yield curve was slightly firmer, but long bonds struggled. Thirty-year yields were seen up by more than a basis point. Five-year bonds were the most improved. Yields were seen down 3 bps.

The trader noted that municipals performed better than Treasuries. Thirty-year Treasuries were up nearly 11 bps, and 20-year yields were up almost 9 bps.

Meanwhile, there was some good news in the market. J.R. Rieger, vice president of fixed income indices with Standard & Poor's, said Thursday that new municipal bond monetary defaults are happening more slowly than in previous years.

"So far in 2011, there have been 36 new municipal bond deals defaulting, totaling over $750 million in par value," said Rieger.

"The amount of outstanding defaulted municipal bonds has remained relatively stable however. The S&P Municipal Bond Index, following over $1.3 trillion in municipal bonds, has recorded 199 outstanding municipal bond deals in default as of Nov. 1, 2011, representing just over 0.5% of the index par value."

New York Liberty sells bonds

Heading up Thursday's active primary calendar, the New York Liberty Development Corp. priced $1,225,520,000 of series 2011 World Trade Center Tower 4 liberty revenue bonds, according to a pricing sheet.

The bonds (/A+/) were sold through senior managers Goldman Sachs & Co. and J.P. Morgan Securities LLC.

The bonds are due in 2031, 2044 and 2051. The 2031 bonds have a 5% coupon priced at 101.177. The 2044 bonds have a split maturity with a 5% coupon priced at 98.625 and a 5.125% coupon priced at 100.583. The 2051 bonds have a 5.75% coupon priced at 105.443.

Proceeds will be used to construct Tower 4 of the World Trade Center, a 64-floor building for office and retail space.

North Texas Tollway prices

In other news, the North Texas Tollway Authority priced $640.535 million of series 2011 special projects system revenue bonds, according to a pricing sheet.

The bonds (/AA/AA-) were sold through JPMorgan.

The offering included $566.87 million of series 2011D tax-exempt bonds and $73.665 million of series 2011E taxable bonds.

The 2011D bonds are due 2019 to 2032 with 5% to 5.25% coupons. The 2011E bonds are due 2019 to 2023 with 3.269% to 3.869% coupons, all priced at par.

Proceeds will be used to fund the construction and development of the Chisholm Trail Parkway in Fort Worth and Cleburne.

Delaware prices G.O.s

Also during the session, the State of Delaware brought to market $275.425 million of series 2011 general obligation bonds, according to a pricing sheet.

The bonds (Aaa/AAA/AAA) were sold through Bank of America Merrill Lynch.

The bonds are due 2012 to 2031 with 2% to 5% coupons.

Proceeds will be used to fund capital projects.

Virginia Resources prices

Elsewhere, the Virginia Resources Authority sold $225.98 million of series 2011 revenue bonds, according to a pricing sheet.

The offering included $129.66 million of series 2011B tax-exempt infrastructure bonds (Aaa/AAA/), $27.75 million of series 2011B taxable infrastructure bonds (Aaa/AAA/), $55.635 million of series 2011B tax-exempt state moral obligation bonds (Aa2/AA/) and $12.935 million of series 2011B taxable state moral obligation bonds (Aa2/AA/).

The 2011B tax-exempt infrastructure bonds are due 2012 to 2033 with term bonds due in 2036 and 2041. The serial coupons range from 2% to 5%. The 2036 bonds have a 5% coupon priced at 110.481. The 2041 bonds have a 5% coupon priced at 110.044.

The 2011B taxable infrastructure bonds are due 2026, 2031 and 2041. The 2026 bonds have a 4.046% coupon priced at par and the 2031 bonds have a 4.353% coupon priced at par. The 2041 bonds have a 4.653% coupon priced at par.

The 2011B tax-exempt state moral obligation bonds are due 2012 to 2027 with term bonds due in 2031, 2036 and 2041. The serial coupons range from 2% to 5%. The 2031 bonds have a 4% coupon priced at 98.913, and the 2036 bonds have a 4% coupon priced at 97.225. The 2041 bonds have a split maturity with a 4% coupon priced at 96.112 and a 4.2% coupon priced at 99.491.

The 2011B taxable state moral obligation bonds are due in 2026, 2031 and 2041. The 2026 bonds have a 4.496% coupon priced at par. The 2031 bonds have a 4.753% coupon priced at par, and the 2041 bonds have a 5.053% coupon priced at par.

Morgan Keegan & Co. Inc. and JPMorgan were the lead managers for the tax-exempt bonds, and Citigroup Global Markets Inc. was the senior manager for the taxable bonds.

Proceeds will be used to acquire or purchase series 2011B local obligations issued by or entered into by certain local governments to finance or refinance qualified projects, as well as to make a deposit to a capital reserve fund.

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