Municipal bonds strengthen, following but underperforming Treasuries; D.C. brings G.O. bonds

By Sheri Kasprzak

New York, Oct. 7 – Municipals were stronger on the session Tuesday after a Treasury rally, traders said. Despite the strength, munis underperformed Treasuries, which saw yields drop by 6 to 7 basis points.

Muni yields were lower by 3 to 5 bps across the curve with intermediate maturities seeing the most change.

Secondary market action remained high, particularly among taxables.

A trader said during the day that recently priced bonds from the Maine Municipal Bond Bank were seen at levels 10 bps firmer than pricing levels.

D.C. G.O. bonds price

Heading up the primary calendar for the day, the District of Columbia hit the market with $514,645,000 of series 2014 general obligation bonds.

The deal included $379.52 million of series 2014C G.O. bonds and $135,125,000 of series 2014D G.O. refunding bonds, said a pricing sheet.

The 2014C bonds are due 2017 to 2035 with a term bond due in 2038. The serial coupons range from 3% to 5%. The 2038 bonds have a 5% coupon and priced at 114.781.

The 2014D bonds are due 2015 to 2033 with coupons from 1% to 5%.

The bonds (Aa2/AA/AA) were sold through senior manager Loop Capital Markets LLC.

Proceeds will be used to finance capital projects under the city’s capital improvement plan and to refund the city’s series 2008A and 2008D multimodal variable-rate G.O. bonds.

Banner Health sells debt

Moving to the health-care sector, the Arizona Health Facilities Authority priced $200.6 million of series 2014A revenue bonds for Banner Health.

The bonds (/AA-/AA-) were sold through senior managers Morgan Stanley & Co. LLC and BofA Merrill Lynch.

The bonds are due in 2044 and have a 4% coupon that priced at par and a 5% coupon that priced at 111.033, according to a term sheet.

Proceeds will be used to refinance interim debt incurred with the acquisition and improvement of the Banner Casa Grande Medical Center in Casa Grande, Ariz.; the construction, equipment and improvement of the Banner Fort Collins Medical Center in Fort Collins, Colo.; and the expansion, renovation and improvement of the M.D. Anderson Cancer Center and the Banner Gateway Medical Center.

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