Municipals little changed as snowstorm strikes; Mankato ISD, Minn., prices $69.5 million debt

By Sheri Kasprzak

New York, Jan. 21 - Municipals ended the snowy session mostly flat as trading activity waned, insiders said.

"There's very little trading, even though we started out with a rally," a trader said in the early afternoon.

"A lot of people are closing up shop because of the storm, and I think that's putting some pressure on yields."

Now that the market is back down to business following the Martin Luther King Day holiday, about $5 billion of new issues are slated to price. The new activity will be led by a $1 billion offering from the Port Authority of New York and New Jersey.

"The municipal market begins the shortened holiday week on a solid technical footing given manageable new issues supply, a 20- to 30-basis point rally since Jan. 3, the lowest municipal-to-Treasury ratios since last June (92% 10-year and 104% 30-year) and, after 33 weeks of outflows, stabilization of mutual fund flows, which Lipper reported as marginally positive in the week ending Jan. 15," wrote Alan Schankel, managing director with Janney Montgomery Scott LLC.

"It is also notable that, despite media stories of a Puerto Rico restructuring conference last week, trading across various island issuers showed stability, with yields on block trades moving generally lower last week."

Mankato ISD bonds price

Moving to the day's light primary activity, the Mankato Independent School District No. 77 of Minnesota sold $69.5 million of series 2014A school building bonds.

The bonds (/AA+/) were sold competitively with BofA Merrill Lynch winning the bid at a 3.38% true interest cost, said Jerry Kolander, director of business affairs for the district.

BofA bid with a TIC of 3.38%, but the debt schedule was revised to pay more principal up front, resulting in a TIC of 3.35%, said Kolander.

The bonds are due 2015 to 2034 with 4% coupons, said a pricing sheet.

Proceeds will be used to finance the construction, acquisition and equipment of school facilities in the district.

"The last building referendum and bond sale occurred in 2008; the true interest cost on those bonds was 4.21%," Kolander said Tuesday.

"The district is not required to sell bonds competitively, and the market conditions were favorable for the sale."

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