Muni yields weaken as Treasuries take hit, stocks improve; Puerto Rico Buildings prices again

By Sheri Kasprzak

New York, Aug. 11 - Municipals were seen slightly off on Thursday, which was a strong day for stocks and a lackluster day for Treasuries, market insiders reported.

"The good news is we're not doing as bad as Treasuries," said one trader reached during the afternoon.

"I'm seeing yields off by 3 to 5 [basis points]. It's not all that surprising, seeing as most of the boost we got yesterday came from the [bad] day the stock market had. Now that stocks are back up, we're off. It's a very volatile situation."

Meanwhile, John Lonski, chief economist with Moody's Investors Service, wrote Thursday that Texas's 80.8 bps credit default swap spread is now thinner than Germany's 83 bps CDS spread.

"Nevertheless, a convincing resolution of Europe's sovereign debt uncertainties would go far at stabilizing financial markets globally," Lonski wrote.

"Otherwise, as long as share prices plunge, the hurdles facing the global economy will climb higher."

Puerto Rico Buildings prices

For the second day in a row, the Puerto Rico Public Buildings Authority came to market, this time selling $303.945 million of series S revenue bonds, said a term sheet.

The bonds were sold through Ramirez & Co. Inc. and RBC Capital Markets LLC.

The bonds are due 2022 to 2034 with term bonds due in 2036, 2039 and 2041. The serial coupons range from 5% to 5.625%. The 2036 bonds have a 5.75% coupon and priced at 99.337. The 2039 bonds have a 5.875% coupon and priced at 99.502, and the 2041 bonds have a 6% coupon and priced at par.

Proceeds will be used to repay the Government Development Bank's lines of credit.

Century bonds price

Elsewhere during the session, the University of Southern California sold $300 million of series 2011 taxable century bonds, said a pricing sheet.

The bonds (Aa1/AA/) were sold through Morgan Stanley & Co. LLC and Goldman Sachs & Co.

The bonds are due Oct. 1, 2111 and have a 5.25% coupon. They priced at par.

Proceeds will be used to fund general capital needs, including renovations and repairs to university properties.

The university is located in Los Angeles.

Although century bonds are uncommon, at least one other university has priced an issue recently. The Massachusetts Institute of Technology brought $750 million of series 2011B taxable bonds in May.

The bonds (Aaa/AAA/) are due July 1, 2111, have a 5.6% coupon and priced at 99.581. Those bonds were upsized from $500 million.

Emory prices revenue bonds

In other university news, the Private Colleges and Universities Authority of Georgia sold $211.49 million of series 2011A revenue bonds for Emory University, said a term sheet.

The bonds (Aa2/AA/) were sold through Barclays Capital Inc. and Morgan Stanley.

The bonds are due 2016 and 2041 with 3% to 5% coupons.

Proceeds will be used to refund all of the university's outstanding series 2001A revenue bonds and 2008B revenue bonds as well as a portion of its series 2002A revenue bonds.

New Mexico Finance offers deal

Over in the competitive market, the New Mexico Finance Authority sold $57.28 million of series 2011B senior-lien public project revolving fund revenue bonds (Aa1/AAA/), said a pricing sheet.

Robert W. Baird & Co. won the tax-exempt portion of the deal, and Morgan Keegan & Co. Inc. took the taxable portion.

The offering included $42.735 million of series 2011B-1 tax-exempt bonds and $14.545 million of series 2011B-2 taxable bonds.

The 2011B-1 bonds are due 2012 to 2031 with a term bond due in 2036. The serial coupons range from 2% to 4%. The 2036 bonds have a 4% coupon and priced at 99.001.

The 2011B-2 bonds are due 2012 to 2026 with term bonds due in 2028 and 2031. The serial coupons range from 2% to 4.45%. The 2028 bonds have a 4.7% coupon and priced at 99.419, and the 2031 bonds have a 4.95% coupon and priced at 99.369.

Proceeds will be used to provide loans to various governmental units.

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