Munis close flat yet again; Erie Industrial Development sells $284 million for Buffalo schools

By Sheri Kasprzak

New York, May 25 - Municipals were once again unchanged as the market searched for direction ahead of the coming Memorial Day weekend, traders said. Technicals point to a strong muni market, but tax-exempts will likely move along with Treasuries, according to Janney Montgomery Scott LLC managing director Alan Schankel.

"We're trying to gauge the market's direction right now, and that's easier said than done," said one trader on Wednesday's market tone.

"You might call us directionless. We're in a holiday mode right now. Everyone's maybe pausing because of Memorial Day."

Yields held steady on Wednesday, even as several substantial deals - mostly on the competitive side - hit the market.

Meanwhile, a solid run of falling yields has lost steam, said Schankel in a report released Wednesday.

"Muni-to-Treasury ratios are on the low side of recent range, but we see continued room to run for munis given the dearth of new issues and the strong reinvestment flows expected in June and July," he wrote.

"In June alone, about $50 billion of municipals will mature or be redeemed, dwarfing the $15 billion of average monthly new issuance through April. It looks like May's total volume, even with the Memorial Day hiatus, will be close to $20 billion."

Erie IDA sells school bonds

Heading up Wednesday's primary action, the Erie County Industrial Development Agency of New York priced $284 million of series 2011 school facilities revenue bonds for the Buffalo City School District, said a partial pricing sheet.

The deal included $170 million of series 2011A revenue bonds and $114 million of series 2011B refunding bonds.

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

The 2011A bonds are due 2013 to 2032 with 5% to 5.25% coupons. The 2011B bonds are due 2012 to 2024 with 1.5% to 5% coupons.

Proceeds will be used to fund improvements and repairs to Buffalo schools and to refund the agency's series 2003 bonds.

Nassau brings notes, bonds

Elsewhere during the session, Nassau County, N.Y., brought two deals to market, both on a competitive basis.

The county sold $230 million of series 2011 general obligation revenue anticipation notes and $82.045 million of series 2011A general improvement G.O. bonds, said pricing sheets.

The RANs offering included $155 million of series 2011A notes and $75 million of series 2011B notes.

The 2011A notes are due March 30, 2012 and have a split maturity with a 2% coupon priced at 101.97 and a 3% coupon priced at 101.785.

The 2011B notes are due April 30, 2012 and have a 3.5% coupon priced at 102.442.

The notes (/SP-1+/F1+) were sold competitively. Calls to the issuer for the winning bidder were not returned by press time.

Proceeds will be used to fund capital requirements ahead of the collection of net allocable sales tax.

The G.O. bonds (A1/A+/AA-) are due 2012 to 2031 with term bonds due in 2033 and 2036. The serial coupons range from 2% to 5%. The 2033 bonds have a 5% coupon priced at par, and the 2036 bonds have a 5% coupon priced at 99.289.

Proceeds will be used to fund capital projects, judgments and settlements.

Jacksonville prices bonds

Also in the competitive market Wednesday, the City of Jacksonville, Fla., brought $108.88 million of series 2011A special revenue bonds, said Michael Givens, the city's treasurer.

The bonds (/AA-/AA) were sold competitively. J.P. Morgan Securities LLC won the bid with a true interest cost of 4.670185%.

The bonds are due 2012 to 2033 with term bonds due in 2036 and 2041. The serial coupons range from 3% to 5.25%. The 2036 bonds have a 5% coupon priced at 98.579, and the 2041 bonds have a 5% coupon priced at 98.004.

"The city's debt-management policy states a preference for competitive sales," Givens said in an interview Wednesday afternoon.

"We occasionally opt for a negotiated sale when there appears to be a market advantage."

Proceeds will be used to finance litigation settlements, to refund commercial paper and to acquire and construct capital equipment and improvements.

Reading district puts off deal

In other market news, the Reading School District of Pennsylvania postponed its planned $77.205 million sale of series 2011 G.O. notes, said a notice released by the financial adviser.

The district had intended to price competitively Wednesday $65.735 million of series 2011A tax-exempt notes and $11.47 million of series 2011AA taxable notes.

A new pricing date has not yet been scheduled for the notes (A2/Aa3).

Proceeds will be used to refund a portion of the district's series 2001A bonds for a net present value savings of $2.7 million and to fund a portion of an $11.8 million swap agreement termination payment.

© 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.