Yields firm yet again as market absorbs new offerings; Charleston County, S.C., prices G.O.s

By Sheri Kasprzak

New York, July 13 - Municipals shrugged off an unstable Treasuries market on Wednesday and continued to firm, with yields seen lower by 1 basis point to 4 bps across the curve, traders reported.

The seven-year and 15-year yields were the most improved, both down by 4 bps. There was a touch of weakness on the very short side. One-year yields were up 2 bps.

With a new crop of offerings coming to market and investors eagerly gobbling them up, one trader noted that the solid pricing levels and reinvigorated interest in munis is helping the market firm.

"It is interesting that we're not really following Treasuries today," he said when asked about municipals' seeming independence on Wednesday.

"There are a lot of issues that impact Treasuries that may have very little to do with [munis]. Right now, we have so much new supply that the demand we've had is finally being fulfilled."

M/T ratios bring buyers

Alan Schankel, managing director with Janney Montgomery Scott LLC, said Wednesday that elevated municipals-to-Treasuries ratios have been bringing buyers in. As a result, tax-exempts are outperforming Treasuries for the first time in several sessions.

"Benchmark yields were 4 to 7 bps lower in most maturities [Tuesday], with 10- and 30-year AAA yields finishing at 2.66% and 4.3%," Schankel wrote in a report released Wednesday morning.

"This week's new issue slate, totaling more than $6.5 billion, is receiving a strong reception thus far, with issues including $400 million [from] New York Metropolitan Transportation Authority and $718 million of Dormitory Authority of the State of New York PITs seeing solid investor interest."

Dasny is slated to bring nearly $718 million of tax-exempts, as well as $44.77 million of taxables, to market this week through Wells Fargo Securities LLC and Barclays Capital Inc.

Charleston County brings G.O.s

Heading up Wednesday's primary action, Charleston County, S.C., priced $189.515 million of series 2011 general obligation refunding and capital improvement bonds, said a pricing sheet.

The deal included $167 million of series 2011 capital improvement transportation sales tax bonds and $22.515 million of series 2011 G.O. refunding and capital improvement bonds.

The 2011 sales tax bonds are due 2012 to 2029 with 3% to 5% coupons. The 2011 capital improvement bonds are due 2012 to 2031 with 2% to 5% coupons.

The bonds (Aaa/AAA/) were sold competitively with Bank of America Merrill Lynch winning the bid.

Proceeds will be used to defray a portion of the costs to construct and acquire nursing school facilities at the Trident Technical College and the costs to acquire, equip, construct and furnish the Charleston County Law Enforcement Center; to refund the county's series 2007 G.O. bonds; and to construct, acquire and design road and greenbelt projects.

West Virginia authority sells

Also during the session, the West Virginia Economic Development Authority priced $108.47 million of series 2011A correctional, juvenile and public safety facilities lease revenue refunding bonds, said a pricing sheet.

The bonds (Aa2) were sold on a negotiated basis with Bank of America Merrill Lynch as the lead manager.

The bonds are due 2012 to 2024 with 2% to 5% coupons.

Proceeds will be used to refund the authority's series 2002A-B lease revenue bonds.

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