Munis soften with Treasuries; Port Authority of New York and New Jersey brings $1 billion

By Sheri Kasprzak

New York, Sept. 27 - Municipals took a hit along with Treasuries on Tuesday, with yields rising by 1 basis point to 7 bps. The short-to-intermediate portion of the yield curve suffered the most. Yields on seven-year bonds were seen up by 7 bps, market insiders said.

One trader pointed out that muni yields were largely following along with a softer Treasuries market. Still, retail investors have been turning their noses up at some of the week's biggest deals, he conceded, noting that munis are probably undergoing a correction from the previous week when retail investors dove into a large number of new offerings.

PANYNJ prices $1 billion

The week's biggest deal came to market on Tuesday. The Port Authority of New York and New Jersey priced $1 billion of 168th series consolidated bonds, said a term sheet.

The bonds (Aa2/AA-/AA-) were sold through Citigroup Global Markets Inc.

The bonds are due Oct. 1, 2051, have a 4.926% coupon and priced at par.

Proceeds will be used to finance capital expenditures related to One World Trade Center and other expenses connected to the World Trade Center site.

"The deal features a 40-year maturity, as the port authority locks in record-low interest rates," wrote Alan Schankel, managing director with Janney Montgomery Scott LLC.

Minnesota brings highway bonds

Elsewhere during the session, the State of Minnesota priced $769 million of series 2011 state trunk highway bonds, said a pricing sheet.

The offering included $445 million of series 2011A bonds, $320 million of series 2011B bonds and $4 million of series 2011C taxable bonds.

The bonds (Aa1//AA+) were sold competitively with Bank of America Merrill Lynch winning the bid.

The 2011A bonds are due 2012 to 2031 with 2% to 5% coupons. The 2011B bonds are due 2012 to 2031 with 3% to 5% coupons. The 2011C bonds are due Oct. 1, 2016, have a 1.35% coupon and priced at 100.239.

Proceeds will be used to fund various capital projects and to refund existing debt for interest rate savings.

Portland sells refunding bonds

In other pricing news, the City of Portland, Ore., priced $67.015 million of series 2011A limited tax revenue refunding bonds competitively on Tuesday, said Patricia Tigue with the city's debt management office.

J.P. Morgan Securities LLC won the bid for the bonds (Aa1), which were sold competitively. The true interest cost came in at 3.63%, Tigue said. The offering was downsized from $72.925 million.

The bonds are due 2012 to 2030 with 2.5% to 5% coupons.

"The city sells most bond issues competitively as a matter of policy unless the debt manager of the city determines that a negotiated sale is preferable," Tigue said.

"In recent years, the city has only used negotiated sales for its tax-increment bonds."

Proceeds will be used to refund the city's series 2001A limited tax revenue bonds.

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