Munis buoyed in part by competitive offerings; Maryland sells upsized $1.15 billion G.O. bonds

By Sheri Kasprzak

New York, July 23 – Municipal prices rose on Wednesday. The rise was driven by some successful competitive offerings, including an upsized general obligation bond sale out of the State of Maryland, insiders said.

Yields were improved by 2 basis points to 3 bps, far outperforming Treasuries on the day. A strong interest in competitive deals, particularly the G.O. offering from Maryland, pushed the market and even spurred stronger secondary action.

Over in Treasuries, the 30-year bond yield rose by 1 bp to 3.26%, the five-year note yield fell by 1 bp to 1.65%, and the 10-year note yield was down slightly at 2.464%.

Maryland G.O. bonds upsized

Moving back to that Maryland offering, the state sold $1,149,715,000 of series 2014 state and local facilities loan G.O. bonds, said a pricing sheet. The offering was upsized from $879,745,000.

The deal included $50,385,000 of series 2014A tax-exempt bonds, $449,615,000 of series 2014B tax-exempt bonds and $649,715,000 of series 2014C tax-exempt refunding bonds.

The 2014A bonds are due 2017 to 2020 with 2% to 5% coupons and 0.56% to 1.49% yields. The 2014B bonds are due 2017 to 2029 with 3% to 5% coupons and yields from 0.55% to 3.05%. The 2014C bonds are due 2020 to 2024 with 5% to 5.25% coupons and 1.43% to 2.17% yields.

The bonds (Aaa/AAA/AAA) were sold on both a competitive and negotiated basis. Citigroup Global Markets Inc. was the senior manager for the 2014A bonds. J.P. Morgan Securities LLC took the series 2014B bonds at a 2.6535% true interest cost. Morgan Stanley & Co. LLC won the series 2014C bonds at a 1.8821% TIC.

Proceeds will be used to acquire and construct state facilities and to make loans to local and state government entities for capital projects.

As one of only 10 states to hold AAA ratings, Maryland treasurer Nancy Kopp said Wednesday that the deal was “well-timed” and coincided with investors’ flight to quality.

In addition, the tax-exempt refunding bonds “will save Maryland taxpayers more than $58 million in debt service costs,” Kopp said in a statement.

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