Municipals improve, underperform rallying Treasuries; Georgia sells $982.9 million G.O. bonds

By Sheri Kasprzak

New York, June 18 – Municipal yields were lower on Wednesday, following but underperforming Treasuries, market insiders said.

Fueled in part by a rally in the Treasuries market after the Federal Open Market Committee’s June policy statement, municipal yields were seen lower by 2 basis points to 4 bps, a trader said.

Primary action continued to dominate the muni market, with trading light as the bulk of the week’s new deals hit the market.

What is pricing, said one market insider, seems to be gaining a lot of interest and solid pricing terms, given the lower supply.

“This week, we’re kind of moving back into that groove we’ve been in for most of the year,” the sellside source said.

Over in Treasuries, the five-year note yield, which is most sensitive to policy changes, dove by 8 bps to end the session at 1.673%, and the 10-year note yield fell by 6.5 bps to 2.586%. The 30-year bond yield fell by 4.5 bps to 3.402%.

At its June meeting Wednesday, the FOMC decided to hold its short-term interest rates unchanged and reduced its pace of monthly bond-buying by another $10 billion.

Georgia G.O. bonds price

Heading up primary action, the State of Georgia sold $982,905,000 of series 2014 general obligation bonds.

The deal included $658.69 million of series 2014A G.O. bonds, $151,115,000 of series 2014B taxable G.O. bonds, $13.75 million of series 2014C taxable qualified school construction bonds and $159.35 million of series 2014D G.O. refunding bonds, said a pricing sheet.

The 2014A bonds are due 2015 to 2034 with 3% to 5% coupons and 0.095% to 3.43% yields.

The 2014B bonds are due 2015 to 2034 with 0.55% to 3.94% coupons and yields from 0.20% to 3.94%.

The 2014C bonds are due 2015 to 2031 with a term bond due in 2034. The serial coupons range from 0.25% to 4% with yields from 0.25% to 3.89%. The 2034 bonds have a 4% coupon and priced at par.

The 2014D bonds are due 2015 to 2018 with 5% coupons and yields from 0.085% to 0.95%.

The bonds (Aaa/AAA/AAA) were sold competitively.

Proceeds will be used to finance various capital outlay projects for the state and to refund existing G.O. debt.

Chicago Transit sells bonds

Elsewhere during the session, the Chicago Transit Authority brought to market $555 million of series 2014 sales tax receipts revenue bonds.

The bonds (/AA/) were sold through senior manager Loop Capital Markets LLC.

The bonds are due in 2044 and 2049. The 2044 bonds have a 5% coupon that priced at 107.286 and a 5% coupon that priced at 108.165. The 2049 bonds have a 5.25% coupon and priced at 108.5.

Proceeds will be used to finance capital projects under the authority’s capital plan.

Houston offers notes

Moving to the competitive market, the City of Houston offered $200 million of series 2014 tax and revenue anticipation notes.

The notes (/SP-1+/F1+) were sold competitively. Citigroup Global Markets Inc. took $25 million of the notes at a 0.10018% true interest cost. Goldman Sachs & Co. took $50 million of the notes at a 0.10018% TIC. BofA Merrill Lynch won $50 million of the notes at a 0.10414% TIC. RBC Capital Markets LLC won $20 million of the notes at a 0.10465% TIC. FTN Financial Inc. took $10 million of the notes at a 0.10492% TIC and $10 million of the notes at a 0.10517% TIC. J.P. Morgan Securities LLC won $35 million of the notes at a 0.10517% TIC.

The weighted average TIC was 0.10298%, said a pricing sheet.

All of the notes are due June 30, 2015; $130 million of the notes have a 1% coupon and priced at 100.894 to yield 0.10%, $20 million of the notes have a 2% coupon and priced at 101.877 to yield 0.11%, and $50 million of the notes have a 5% coupon and priced at 104.868 to yield 0.10%.

Proceeds will be used to finance working cash requirements in the coming year.

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