Yields fall as much as 6 bps; Puerto Rico deal indefinitely delayed; New Jersey to top slate

By Sheri Kasprzak

New York, Aug. 20 – Municipals strengthened on the session, boosted in part by a stronger Treasuries market, sources reported Thursday.

Yields on top-rated munis fell by as much as 6 basis points, following in line with Treasuries, which were buoyed by increased confidence that an interest rate hike is unlikely for September.

The 30-year Treasury bond yield fell by 5 bps Thursday, and the 10-year yield fell by 3 bps, but the two-year note yield rose by 2 bps.

Elsewhere in the muni market Thursday, the Puerto Rico Aqueduct and Sewer Authority’s $750 million revenue bond offering was once again delayed, this time indefinitely. The offering is not on the calendar for the coming week so far. The deal had been slated to price Tuesday, but it was pushed back to Thursday. Timing of the deal now remains uncertain.

New Jersey deal ahead

One of the largest deals of the year is expected next week. The New Jersey Economic Development Authority is poised to price $2.22 billion of series 2015 school facilities bonds on Tuesday.

The deal includes $500 million of series 2015WW school facilities construction bonds, $860 million of series 2015XX school facilities construction refunding bonds and $860 million of series 2015YY taxable school facilities construction refunding bonds.

The maturities have not been set.

The bonds (A3/A-/A-) will be sold on a negotiated basis. The senior manager is BofA Merrill Lynch.

Proceeds will be used to finance school construction projects and refund outstanding school debt.

The offering comes on the heels of an outlook upgrade from Fitch Ratings. The ratings agency lifted the State of New Jersey’s outlook to stable from negative, citing the abatement of near-term budget risks and recent positive revenue performance.

CareGroup brings bonds

Among Thursday’s primary offerings, the Massachusetts Development Finance Agency priced $229,865,000 of series 2015H revenue bonds for CareGroup Inc. The deal was downsized from $290 million.

The deal included $179.26 million of series 2015H-1 tax-exempt bonds and $50,605,000 of series 2015H-2 taxable bonds.

The 2015H-1 bonds are due 2016 to 2033 with 3% to 5% coupons.

The 2015H-2 bonds are due 2016 to 2025 with 1% to 3.967% coupons and all priced at par.

The bonds (A3/A-/) were sold through Citigroup Global Markets Inc.

Proceeds will be used to refund the agency’s series 1998D, 2003E and 2005D bonds.

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