Municipals close mostly unchanged; New York's Tobacco Settlement Financing sells $1.23 billion

By Sheri Kasprzak

New York, Dec. 5 - Municipal yields were mostly unchanged to slightly cheaper on Thursday as the bulk of the week's larger offerings priced, market sources said.

Munis were flat to about 2 basis points weaker. They outperformed Treasuries, which were off following the release of third-quarter gross domestic product data and initial jobless claims for the week ended Nov. 30.

Following this data, the five-year Treasury note yield rose by 3.5 bps to end the session at 1.477% and the 10-year note yield climbed by 3 bps to 2.865%. The 30-year bond yield rose by 1 bp to close at 3.911%.

Municipal secondary action picked up after getting off to a slow start early in the day. Primary action, despite being strong, tapered as the larger offerings of the week priced.

Tobacco Settlement deal prices

Heading up the primary activity, New York's Tobacco Settlement Financing Corp. priced $1,230,620,000 of series 2013 asset-backed revenue bonds (/AA-/AA-).

The deal included $662,545,000 of series 2013A bonds and $568,075,000 of series 2013B bonds, said a pricing sheet.

The 2013A bonds are due 2018 to 2022 with 3% to 5% coupons and 0.55% to 2.03% yields.

The 2013B bonds are due 2019 to 2022 with 5% coupons and 0.70% to 2.03% yields.

Citigroup Global Markets Inc., Barclays and Ramirez & Co. Inc. were the senior managers.

Proceeds will be used to refund all of the corporation's series 2003A-1C and series 2003B-1C asset-backed revenue bonds.

Alan Schankel, managing director with Janney Montgomery Scott LLC, said Thursday that demand was strong for the offering with yields adjusted lower for institutional pricing.

As previously noted, New York's tobacco settlement revenue secured offerings have a state appropriation pledge as a backup in the event the corporation is unable to pay debt service.

Nassau sells notes, bonds

Also out of the Empire State, Nassau County, N.Y., came to market with $441,785,000 of series 2013 general obligation bonds and notes in a multi-tranche deal.

The offering was conducted through senior manager Ramirez.

The deal included $90.71 million of series 2013C general improvement G.O. bonds, $1,075,000 of series 2013D taxable general improvement G.O. bonds, $125 million of series 2013B G.O. bond anticipation notes, $148 million of series 2013A tax anticipation notes and $77 million of series 2013B tax anticipation notes, according to pricing sheets.

The 2013C bonds are due 2015 to 2033 with term bonds due in 2038 and 2043. The serial bonds have 5% coupons with 0.68% to 4.69% yields. The 2038 bonds have a 5% coupon and priced at 100.361 to yield 4.95%, and the 2043 bonds have a 5% coupon and priced at 99.232 to yield 5.05%.

The 2013D bonds are due April 1, 2015, have a 0.75% coupon and priced at par.

The 2013B BANs are due July 1, 2014, have a 2% coupon and priced at 100.831.

The 2013A TANs are due Sept. 15, 2014, have a 2% coupon and priced at 101.099, and the 2013B TANs are due Oct. 15, 2014, have a 2% coupon and priced at 101.219.

Proceeds will be used to finance county capital expenditures and cash requirements ahead of the collection of certain taxes.

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