Munis post gains as secondary activity picks up; Metropolitan Transportation Authority upsizes

By Sheri Kasprzak

New York, April 18 - Municipals saw some gains on Wednesday as secondary market activity picked up, market insiders said.

"The bulk of primary has pretty much priced already," said one trader reached during the afternoon.

"Yields were better by 1 to 3 basis points, especially around 10 years. We saw some decent bid-wanted activity throughout the day. That supply we've been seeing is getting absorbed."

Meanwhile, the Metropolitan Transportation Authority of New York came to market with $727.43 million of series 2012C transportation revenue bonds, a deal that was upsized from $600 million.

The bonds (A2//A) were sold through Wells Fargo Securities LLC.

The bonds are due 2012 to 2033 with term bonds due in 2041 and 2047. The serial coupons range from 2% to 5%. The 2041 bonds have a 5% coupon and priced at 107.634, and the 2047 bonds have a 5% coupon and priced at 106.226.

"Investor demand for New York MTA was sufficiently strong that the issue was upsized ... with final pricing delivering yields of 2.83% in 10 years and 4.3% in 30 years, 6 and 11 basis points lower than Monday's retail pricing," said Alan Schankel, managing director with Janney Montgomery Scott LLC.

Proceeds will be used to finance approved transit and commuter projects.

New Jersey bonds price

Elsewhere in primary action, the New Jersey Environmental Infrastructure Trust priced $93.03 million of series 2012 environmental infrastructure bonds, said a pricing sheet.

The offering included $67,765,000 of series 2012A environmental bonds, $20.49 million of series 2012B AMT bonds and $4,775,000 of series 2012C taxable bonds.

The bonds (Aa3//AAA) were sold competitively with Barclays Capital Inc. winning the series 2012A bonds, Wells Fargo Bank, NA winning the series 2012B bonds and Janney Montgomery Scott LLC winning the 2012C bonds. The interest rate for the 2012A bonds was 2.748982%, the rate for the 2012B bonds was 3.243755%, and the rate for the 2012C bonds was 3.551794%.

The 2012A bonds are due 2013 to 2031 with 2% to 5% coupons. The 2012B bonds are also due 2013 to 2031 with 2% to 5% coupons. The 2012C bonds are due 2014 to 2031 with coupons from 2% to 4%.

"The proceeds of today's bond sale will be utilized to partially fund the 81 projects through the New Jersey Environmental Infrastructure Financing Program," Frank Scangarella, a spokesman for the trust, said in a statement.

"NJEIT's partner in the NJEIFP, the New Jersey Department of Environmental Protection, will provide the remaining funding for these projects through a 0%-rate loan. The NJEIFP combines interest-free loans from the NJDEP with market-rate loans from the sale of trust bonds."

David Zimmer, the trust's executive director, said Wednesday that the sale will provide low-interest long-term loans to several local governments to finance more than 1,000 projects in the state.

"Our goal is to incentivize the completion of environmental infrastructure projects by keeping costs as low as possible for those state entities which are responsible for protecting New Jersey's water resources and providing water services to the public," Zimmer said.

Bridge authority taps market

In other primary news, the New York State Bridge Authority revealed the details of its $90,325,000 sale of series 2012 general revenue bonds in a pricing sheet.

The bonds (Aa3/AA-/) were sold competitively with J.P. Morgan Securities LLC winning the bid with a 2.71% true interest cost, Brian Bushek, the authority's treasurer, said in an interview conducted Wednesday.

The bonds are due 2014 to 2027 with 2% to 5% coupons.

"The authority has a policy of choice but prefers to go competitive," said Bushek. "It enables greater transparency."

Bushek pointed out that it's hard to compare the authority's last offering since it happened more than a decade ago.

"The last time the authority was in the market with a bond offering was 10 to 15 years ago," he said.

"The authority is not in the market all the time. The last time was a refunding back in December."

That refunding had a five-year maturity, so it's hard to compare it to this new money deal.

Proceeds from the 2012 bonds will be used to finance several highway improvements, including the reconstruction of the Route 9/44/55 Interchange at the terminus of the Mid-Hudson Bridge, the reconstruction and improvement of the Interstate 84/Route 9D Interchange in Duchess County Intermodal Facility, the reconstruction of Route 9W and a portion of the replacement cost for the Tappan Zee Bridge.

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