Municipal yields firm by 3 to 4 bps; North Texas Tollway brings upsized $1.2 billion issue

By Sheri Kasprzak

New York, April 14 - Municipal yields were yet again improved, this time by as much as 4 basis points, said traders.

"It could be a supply issue," said one trader reached in the afternoon.

"Supply kind of vanished after the New York Liberty [Development Corp.] deal got cut. It's really hard to tell exactly why, but I suspect there are a few factors, like supply and flight to quality."

Meanwhile, Alan Schankel, managing director with Janney Montgomery Scott LLC, said Thursday that individual investors were the net buyers of municipals during the first quarter.

"Retail investors are increasing direct muni holdings even though municipal mutual funds continue to see outflows, with $847 million in redemptions for the week ending April 6," Schankel noted.

"Fed data for the fourth quarter showed increased holding of munis on the part of individual investors, more than offsetting declines in mutual fund positions."

Schankel said March was the third month in a row that the number of buy trades in munis exceeded the number of sell trades.

North Texas prices, reprices

Heading up Thursday's primary action, the North Texas Tollway Authority sold $1.2 billion of series 2011 revenue bonds and taxable bond anticipation notes (/AA/AA-), said a pricing sheet. The offering was upsized from $1.029 billion.

The exact breakdown of the two tranches was unavailable Thursday evening.

Schankel said Thursday that the bonds were repriced. The issuer lowered yields by 2 bps to 10 bps following strong demand.

The 2011 special projects revenue bonds are due 2014 to 2018, 2020 to 2021, 2023 to 2026 and 2028 to 2031 with term bonds due in 2036 and 2041. The serial coupons range from 4% to 5.5%. The 2036 bonds have a 5.5% coupon, and the 2041 bonds have a split maturity with a 5.5% coupon and a 6% coupon.

The BANs are due Sept. 1, 2013 and have a 2.441% coupon priced at par.

Citigroup Global Markets Inc. was the senior manager. The co-managers were Barclays Capital Inc., Estrada Hinojosa & Co. Inc., Loop Capital Markets LLC, Morgan Keegan & Co. Inc., Morgan Stanley & Co. Inc. and Ramirez & Co. Inc.

Proceeds will be used to make an upfront payment to the Texas Department of Transportation for the authority's right to own and operate an 11.5-mile toll stretch of State Highway 161 in western Dallas County extending from State Highway 183 to Interstate 20.

Michigan brings G.O. bonds

In other pricing activity, the State of Michigan brought $150 million of series 2011A taxable general obligation school loan bonds, said a pricing sheet.

The bonds (Aa2/AA-/) were sold competitively with J.P. Morgan Securities LLC winning the bid. The bonds are due 2014 to 2023 with coupons from 2.05% to 4.8%, all priced at par.

Proceeds will be lent to local school districts for capital improvements.

St. Lucie school bonds price

Elsewhere, the St. Lucie County School Board of Florida reportedly priced $52.54 million of series 2011A refunding certificates of participation through Citigroup.

The COPs (Aa3/AA+/) are due 2012 to 2021. The coupons reportedly range from 2% to 5%, but exact pricing details were unavailable at press time Thursday evening.

Proceeds will be used to refund the board's series 2004A, 2004QZAB, 2010B and 2010C bonds.

The district is based in Fort Pierce.

Mayo Clinic deal ahead

Looking at upcoming offerings, the City of Rochester, Minn., is slated to bring $290 million of series 2011 health-care facilities revenue bonds for the Mayo Clinic, said a preliminary official statement released Thursday.

The bonds (Aa2/AA/) will be sold through Merrill Lynch and Wells Fargo Securities LLC, and proceeds will go to refund the clinic's series 1992 and 2001 bonds.

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