Municipals improve as remaining supply prices; Orange County brings downsized refunding bonds

By Sheri Kasprzak

New York, May 28 – Municipals rounded out Thursday on a positive note, with yields falling by as much as 2 basis points, said traders.

Amid light trading action, the 10-year triple-A benchmark yield fell by 2 bps to 2.23% and the 30-year yield fell by 1 bp to 3.2%.

Munis were in line with Treasuries on the day as both the 30-year and 10-year yields fell by 1 bp.

Orange County sells debt

Looking to the competitive market Thursday, Orange County, Fla., offered $154.2 million of series 2015 tourist development tax refunding revenue bonds, a deal that was downsized from $170.07 million.

The bonds (Aa3/AA-/AA) were sold competitively with J.P. Morgan Securities LLC winning the bid.

The bonds are due 2016 to 2031 with 2% to 5% coupons and 0.47% to 3.32% yields.

Proceeds will be used to current refund the county’s series 2005 tourist development tax refunding revenue bonds.

Pa. 10s at 72 bps over MMD

In other muni news, Pennsylvania’s $1,237,230,000 of general obligation bonds (Aa3/AA-/AA-) hit the market Wednesday – but at a cost.

The 10-year G.O. bonds priced at a 5% coupon to yield 2.97%, 72 bps over the 2.25% MMD benchmark yield. For comparison’s sake, the $1 billion the commonwealth priced in February had a 5% coupon to yield 2.26%, 46 bps above the 1.8% benchmark at the time.

“So effectively, the Keystone State’s borrowing cost has risen by 26 bps in recent months,” said Alan Schankel, managing director with Janney Montgomery Scott LLC.

The deal included $460 million of second series 2015 bonds and $777.23 million of first series 2015 refunding bonds.

The second series bonds are due 2016 to 2035 with 3.25% to 5% coupons. The first series bonds are due 2016 to 2026 with 5% coupons.

The bonds were sold competitively with BofA Merrill Lynch winning the bid.

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