Munis improve along with Treasuries as large deals price; Los Angeles USD prices $1.6 billion

By Sheri Kasprzak

New York, June 12 – Municipal yields were lower on Thursday. They followed but underperformed Treasuries, which got a boost from a successful auction of 30-year Treasuries, market sources said.

A trader reached Thursday afternoon said yields were 3 basis points to 4 bps lower across the curve.

Meanwhile, Treasury yields were 4 bps to 5.5 bps lower.

L.A. USD deal prices

Heading up the day’s primary action, the Los Angeles Unified School District sold $1,622,000,000 of series 2014 general obligation refunding bonds. The deal was downsized from $1,703,000,000.

The deal included $196.85 million of series 2014A bonds, $323,335,000 of series 2014B bonds, $948,355,000 of series 2014C bonds and $153.46 million of series 2014D bonds.

The 2014A bonds are due 2015 to 2022 with 1% to 5% coupons.

The 2014B bonds are due 2017 to 2026 with 5% coupons.

The 2014C bonds are due 2015 to 2031 with coupons from 1% to 5%.

The 2014D bonds are due 2018 to 2030 with 5% coupons.

The bonds (/AA-/) were sold through J.P. Morgan Securities LLC.

Proceeds will be used to advance or current refund existing debt held by the district.

NYC G.O. bonds adjusted higher

Moving to other issues from the week, the City of New York’s $1,020,660,000 of series 2014 G.O. bonds, which were upsized from $850 million, saw yields in most maturities adjusted higher by 4 bps to 8 bps compared to the retail order period, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

The deal included $918.49 million of series 2014J bonds and $102.17 million of series 2014K bonds.

The 2014J bonds are due 2015 to 2034 with 2% to 5% coupons. The 2014K bonds are due 2014 to 2022 with 2% to 5% coupons.

The bonds (Aa2/AA/AA) were sold through Morgan Stanley & Co. LLC.

Proceeds will be used to refund outstanding G.O. debt.

Maine brings debt

Elsewhere during the session, the State of Maine priced $112,945,000 of series 2014 G.O. bonds.

The deal included $40,045,000 of series 2014A taxable bonds and $72.9 million of series 2014B bonds.

The 2014A bonds are due 2015 to 2018 with 0.2% to 1.55% coupons and 0.20% to 1.46% yields.

The 2014B bonds are due 2018 to 2024 with 5% coupons and 1.01% to 2.39% yields.

The bonds (Aa2/AA/) were sold competitively. JPMorgan won the bid for the series 2014A bonds at a 0.925% true interest cost, and Raymond James/Morgan Keegan won the bid for the series 2014B bonds at a 2.019% TIC.

Neria Douglas, Maine’s treasurer, said in an interview Thursday that the state chose to conduct a competitive sale because of some tension with Gov. Paul LePage, who has imposed limits on bond offerings.

“We’re not required to, but due to a number of factors, it seemed the wisest path at this time,” Douglas said.

“We had a little difficulty with the governor changing his mind about bonding. Interviewing for a negotiated sale was time consuming. It was a difficult environment. It just made things nice and neat to be able to use our independent debt adviser to move forward.”

Proceeds will be used to finance capital expenditures within the state and to repay bond anticipation notes.

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