Municipals weaken along with Treasuries; Los Angeles Community College brings offering

By Sheri Kasprzak

New York, Dec. 11 – Municipals sank on the day along with Treasuries, market insiders said, amid strong retail sales data.

Yields were about a basis point cheaper on the session despite getting off to a strong start, said a trader. Early on, yields were pushed by continued demand for the week’s very large supply.

“We have been generally stronger because everyone is flocking to new deals, but we’re feeling some pressure from Treasuries this afternoon,” said the trader.

Strong retail sales data pushed Treasury yields up by a basis point in 10-year and 30-year maturities but up 4 bps at five years.

College bonds price

The deal of the day came from the Los Angeles Community College District, which came to market with $1,893,075,000 of series 2015 general obligation bonds. The deal was upsized from $1,395,000,000.

The deal included $1,495,575,000 of series 2015A tax-exempt bonds, $47,075,000 of series 2015B taxable refunding bonds, $300 million of election of 2008 series 2015G tax-exempt bonds and $50 million of election 2008 series 2015H taxable bonds, according to a pricing sheet.

The 2015A bonds are due 2015 to 2033 with 2% to 5% coupons and 0.1% to 3.19% yields.

The 2015B bonds are due 2015 to 2024 with coupons from 0.297% to 3.129%, all priced at par.

The 2015G bonds are due 2015 to 2034 with a term bond due in 2039. The serial coupons range from 2% to 5% with yields from 0.06% to 3.24%. The 2039 bonds have a 3.5% coupon priced at 99.25 to yield 3.546% and a 4% coupon priced at 104.695 to yield 3.42%.

The 2015H bonds are due in 2015 and have a 0.297% coupon priced at par.

In secondary trading, the district’s 2015A 2028s were seen trading at their pricing level of 2.54%.

The bonds (Aa1/AA+/) were sold on a negotiated basis with Morgan Stanley & Co. LLC as the senior manager for the tax-exempt bonds and Ramirez & Co. Inc. as the underwriter for the taxable bonds.

Proceeds will be used to finance classroom improvements at community colleges, as well as refund the district’s series 2004A-B G.O. bonds.

Loma Linda brings debt

Another larger offering came from the California Statewide Communities Development Authority. The authority sold $683,305,000 of series 2014 revenue bonds for the Loma Linda University Medical Center, according to a pricing sheet.

The deal included $547,575,000 of series 2014A bonds, $122.84 million of series 2014B taxable bonds and $12.89 million of series 2014C taxable bonds.

The 2014A bonds are due 2029, 2034, 2044 and 2054. The 2029 bonds have a 5.25% coupon priced at 108.626 to yield 4.18%, and the 2034 bonds have a 5.25% coupon priced at 106.449 to yield 4.44%. The 2044 bonds have a 5.25% coupon priced at 104.324 to yield 4.7%, and the 2054 bonds have a 5.5% coupon priced at 4.96%.

The 2014B bonds are due Dec. 1, 2024 and have a 6% coupon priced at par.

The 2014C bonds are due Dec. 1, 2016 and have a 2.75% coupon priced at par.

The yield on the 2014A 2044 bonds were trading much higher by the end of the day 4.41%.

The bonds (/BBB/BBB-) were sold through senior manager BofA Merrill Lynch and Goldman Sachs & Co.

Proceeds will be used to finance the acquisition, construction, equipment and repair of certain medical center facilities, as well as to refund the medical center’s series 2005, 2007 and 2008A-B revenue bonds.

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