Munis mixed as Treasuries weaken; Texas brings $9.8 billion of short-term debt; Houston prices

By Sheri Kasprzak

New York, Aug. 23 - Municipals were a mixed bag on Tuesday with little in secondary to push the market and as Treasuries hit a snag, said market insiders.

Short yields were seen up about 1 basis point, said one trader, but longer maturities were down 1 bp to 3 bps at the end of the day.

"We seemed to be following Treasuries for most of the day, but near the end, we turned around a little," he said.

"I think good pricing on some new stuff helped somewhat. It's been off and on today."

Heading up the day's action was a $9.8 billion offering out of the Lone Star State. Texas came to market with $9.8 billion of series 2011A tax and revenue anticipation notes, a deal that could set the direction for the broader short-term market this week.

The notes (MIG 1/SP-1+/F1+) were sold competitively. J.P. Morgan Securities LLC won the largest share of the offering, taking $9.115 billion. First Southwest Co. took $15 million, RBC Capital Markets LLC won $10 million, Citigroup Global Markets Inc. took $250 million, Barclays Capital Inc. won $400 million, and Piper Jaffray & Co. took $10 million. The weighted true interest cost came in at 0.27306606414%.

The notes are due Aug. 30, 2012, have a 2.5% coupon and priced at 102.232.

Proceeds from the sale will be used to avoid a cash shortfall in the unrestricted accounts in the state's general revenue fund during fiscal year 2012.

"We expect demand for this issue to give direction to the short-term market for this week," wrote Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC, in his morning note Tuesday.

"Last year, Texas competitively priced $7.8 billion of [2%] notes with a one-year maturity, and bids [started] at 0.30% and stopped out or ended at 0.35%, about 9 bps above the AAA Municipal Market Data Scale."

Houston prices utility deal

Also in Tuesday's primary market, the City of Houston brought $175 million of series 2011E first-lien combined utility system revenue refunding bonds, said a pricing sheet.

The bonds (/AA/AA-) were sold through senior manager Wells Fargo Securities LLC.

The bonds are due 2013 to 2021 with 5% coupons across the board. The full pricing data was unavailable Tuesday evening.

Proceeds will be used to refund the city's series 2001A water and sewer junior-lien revenue refunding bonds.

Ocean County sells debt

In the competitive market, Ocean County, N.J., priced $56.8 million of series 2011 general improvement and general obligation refunding bonds, said a pricing sheet.

The bonds (Aaa//AAA) were sold competitively. Raymond James & Associates Inc. took the general improvement bonds, and Hutchinson, Shockey, Erley & Co. won the G.O. refunding bonds.

The offering included $26.2 million of series 2011 general improvement bonds and $30.6 million of series 2011 G.O. refunding bonds.

The 2011 general improvement bonds are due 2012 to 2031 with 2% to 4% coupons. The 2011 G.O. refunding bonds are due 2012 to 2023 with 2% to 4% coupons.

Proceeds will be used to finance capital projects, acquire land, construct, reconstruct and resurface projects and refund the county's series 2004 G.O. bonds.

"Today, Ocean County refinanced about $30 million of previously issued bonds and received an interest rate of 2%," Ocean County freeholder John Bartlett Jr. said in a statement.

"The rate is one of the lowest we have received and is half the interest rate we had been paying. Retaining the AAA bond rating ... has allowed us to lock in substantially lower rates and save almost $1.9 million."

The new money will finance capital projects, including roads and bridge projects, as well as facility maintenance, said Bartlett.

© 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.