Munis tumble as market struggles with supply; Massachusetts School Building sells $300 million

By Sheri Kasprzak

New York, May 5 – Municipals got off to another rocky start Tuesday with yields climbing by 4 basis points on the long end, market insiders said.

The market continues to grapple with supply as insiders anticipate $9.5 billion of new issues this week, led by a massive slate of refundings.

“There are a lot of dealers with a huge inventory right now,” said a trader in the afternoon.

“Things are not flying off the shelves, so we’re dealing with a bit of a logjam right now.”

Munis underperformed Treasuries on the day, but Treasuries saw quite a bit of weakness as well. Strong service sector data sent the 10-year and five-year Treasury note yields up 3 bps and the 30-year yield up 2 bps.

Massachusetts School Building Authority debt prices

Heading up the day’s primary action, the Massachusetts School Building Authority sold $300.19 million of series 2015B senior dedicated sales tax bonds.

The bonds (Aa2/AA+/AA+) were sold competitively.

The bonds are due 2016 to 2040 with a term bond due in 2045. The serial coupons range from 4% to 5% with 0.17% to 3.84% yields. The 2045 bonds have a 4% coupon and priced at 100.874 to yield 3.89%.

Proceeds will be used to pay the authority’s series 2014A dedicated sales tax notes in full at maturity.

Emerson College brings bonds

Another deal out of the Bay State came from the Massachusetts Development Finance Agency, which offered $132.74 million of series 2015 revenue bonds for Emerson College.

The bonds (Baa1/BBB+/) were sold through Barclays and J.P. Morgan Securities LLC.

The bonds are due 2019 to 2031 with term bonds due in 2035, 2041 and 2045. The serial bonds have 5% coupons. The 2035 bonds have a 5% coupon and priced at 106.115, and the 2041 bonds have a 5% coupon and priced at 105.467. The 2045 bonds have a 4.5% coupon that priced at 98.005 and a 5% coupon that priced at 105.145.

Proceeds will be used to finance the demolition of existing structures at 1 to 3 Boylston Place on the college’s main campus in Boston and to refund existing debt.

Athens-Clarke refunds bonds

Elsewhere during the day, the Unified Government of Athens-Clarke County, Ga., sold $211,435,000 of series 2015 water and sewerage revenue bonds, said a pricing sheet.

The bonds (Aa1/AA/AA+) were sold through Citigroup Global Markets Inc.

The bonds are due 2016 to 2038 with coupons from 2% to 5%.

Proceeds will be used to refund the government’s series 2008 water and sewerage bonds.

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