Municipals cheapen a touch, outperform Treasuries; Puerto Rico trades account for 7.36% volume

By Sheri Kasprzak

New York, Feb. 12 - Municipals were somewhat cheaper on Wednesday, but they still outperformed a floundering Treasuries market, insiders reported.

Secondary action was slower than average, thanks in part to an anemic new issue calendar, and Puerto Rico trades accounted for 7.36% of trading volume, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"In Tuesday's closing comment, MMA noted block trades of XLCA wrapped PREPAs (Ba2/BBB/BBB-) in maturities from 2016 to 2018 at yields ranging from 10.13% to 11.39%," Schankel said Wednesday morning.

"Longer PR G.O.s (Ba2/BB+/BB), as represented by 5% of 2041, continued to see $1 million plus block trades around the 8% level, consistent with trading throughout the three-downgrade process of the past seven trading sessions."

Fitch says downgrades declined

Moving to other ratings news, Fitch Ratings reported that the number of downgrades for all U.S. public finance sectors decreased to 189 in 2013 from 198 in 2012. The number of upgrades increased to 101 from 84 for the same period, said the report released Wednesday from senior director Sarah Repucci and managing director Vincent Barberio.

The downgrade-to-upgrade ratio by rating action was 1.9 to 1, down from 2.4 to 1 in 2012. The downgrade-to-upgrade ratio by par amount was 1.1 to 1, down from 2.9 to 1 in 2012.

"Downgrades have outnumbered upgrades in each of the last five years," Repucci and Barberio wrote.

"Tax-supported ratings downgrades accounted for the bulk of all U.S. public finance rating downgrades again last year (60% of all downgrades)."

Nevada higher ed bonds price

Elsewhere, the Nevada System of Higher Education released additional information on its $50.93 million sale of series 2014A universities revenue bonds.

The bonds (/AA-/) were sold competitively. BofA Merrill Lynch won the bid at a 4.023348% true interest cost.

The bonds are due 2015 to 2039 with term bonds due in 2041 and 2043. The serial coupons range from 4% to 5%. The 2041 bonds have a 4.375% coupon priced at 98.04, and the 2043 bonds have a 4.5% coupon priced at 99.509.

Proceeds will be used to acquire and construct capital facilities at the University of Nevada in Reno and Las Vegas.

The system last came to market with bonds via competitive sale in April 2013. The offering included $40,035,000 of series 2013A bonds at a 3.203246% TIC and $105.3 million at a 3.031982% TIC, said John Kuhlman, spokesman for the system.

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