Municipals continue to decline in sympathy with Treasuries; Los Angeles airports bonds price

By Sheri Kasprzak

New York, Feb. 5 – Municipals weakened yet again on Thursday, falling with Treasuries, said market insiders.

Demand remains strong for munis, said one sellside source, but yields have been pressured by international issues that have in turn shoved Treasuries down. Muni yields were higher by as much as 2 basis points, said a trader during the afternoon, in line with Treasury losses on the day.

The 30-year Treasury bond yield rose by 3 bps, and the 10-year note yield climbed by 2 bps.

Despite falling in line with Treasuries Thursday, munis have been outperforming Treasuries even while weakening. The 10-year municipal/Treasury ratio was at 105% on Tuesday, the highest level since September 2013.

Moving to demand, the Investment Company Institute said inflows to muni funds totaled $1.3 billion last week, bringing January inflows to $4.6 billion.

Los Angeles Airports prices

Heading up the day’s primary activity, the Los Angeles Department of Airports hit the market with $499,125,000 of series 2015 revenue bonds.

The bonds (Aa3/AA/AA) were sold through senior manager Morgan Stanley & Co. LLC.

The offering included $268.08 million of series 2015A AMT senior revenue bonds, $48,165,000 of series 2015B non-AMT senior revenue bonds and $182.88 million of series 2015C non-AMT subordinate revenue refunding bonds, according to a pricing sheet.

The 2015A bonds are due 2016 to 2035 with term bonds due in 2040 and 2045. The serial coupons range from 2% to 5%. The 2040 bonds have a 4.75% coupon that priced at 112.677 and a 5% coupon that priced at 115.304. The 2045 bonds have a 5% coupon and priced at 114.74.

The 2015B bonds are due 2017 to 2035 with term bonds due in 2040 and 2045. The serial coupons range from 3% to 5%. The 2040 bonds have a 5% coupon and priced at 118.268, and the 2045 bonds have a 5% coupon and priced at 117.783.

The 2015C bonds are due 2016 to 2035 with a term bond due in 2038. The serial coupons range from 2% to 5%. The 2038 bonds have a 5% coupon and priced at 117.494.

Proceeds will be used to finance the enlargement and reconfiguration of the Tom Bradley International Terminal, the demolition of the original terminal concourses and improvements to the original main terminal.

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