Municipals wrap up flat to a touch stronger; Chicago sells G.O.s with long yield at 4.875%

By Sheri Kasprzak

New York, Jan. 12 – Municipals ignored a stronger Treasuries market Tuesday, closing mostly flat with some firmness seen in spots, market sources said.

Yields on top-rated municipal bonds were steady, with the 10-year triple-A bond yield settling at 1.90% and the 30-year yield at 2.83%.

Over in Treasuries, the 30-year bond yield fell by 7 basis points to end the session at 2.89%, and the 10-year benchmark note yield closed the day 5 bps lower at 2.12%. The five-year note yield settled 3 bps better at 1.55%.

Treasuries were largely pushed by tumbling oil prices. Crude oil fell to $30.44 per barrel on Tuesday.

Chicago brings G.O.s

Heading up the day’s primary action, the City of Chicago offered $500 million of general obligation refunding bonds (Ba1/BBB+/BBB+) via Citigroup Global Markets Inc.

The full terms were not immediately available Tuesday, but a source familiar with the deal told Prospect News that the 10-year bond was offered at a 4.31% yield after pricing at 4.35% during Monday’s retail order period. The 2038 term bond saw a 4.875% yield after pricing at 4.95% for retail. Coupons across the yield curve came in at 5%.

The city intends to refund or pay interest on all or certain outstanding G.O. bonds.

Back in July, the city offered almost $1.1 billion of G.O. debt due 2019 to 2042 with 3.9% to 7.962% yields.

East Carolina offers debt

Elsewhere during the session, East Carolina University of North Carolina offered one of the week’s larger university deals, selling $143.43 million of general revenue bonds.

The deal included $139.92 million of series 2016A bonds and $3.51 million of series 2016B taxable bonds.

The 2016A bonds are due 2017 to 2043 with a term bond due in 2045. The serial coupons range from 2% to 5% and yields from 0.73% to 3.659%. The 2045 bonds have a 4% coupon priced at 104.508 to yield 3.47%.

The 2016B bonds are due 2017 to 2018 with 5% coupons and 1.05% to 1.27% yields.

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

Proceeds will be used to construct and equip a student union building and renovate three residence halls.

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