Muni yields jump as supply continues unabated; Houston prices; Dallas ISD sells $950.3 million

By Sheri Kasprzak

New York, Nov. 16 - Municipal yields continued to climb on Tuesday as new issue volume continued to put pressure on the market.

"Thirty-year yields are through the roof," reported one trader.

"We're up at least another 10 [basis points] out long. It [supply] has almost reached critical mass. The market just can't handle it."

The trader said he's heard the week's issuance is the heaviest in about seven years.

It's not just the long bonds that are taking the hit. Top-rated 10-year munis were also on the rise. They were seen at 2.67%, the highest level since July.

Pressure on the markets forced some refunding offerings off the calendar Tuesday.

Although the South Carolina Transportation Infrastructure Bond Bank came to market with its $191.85 million sale of series 2010A revenue bonds Tuesday, the issuer postponed a $33.445 million portion of series 2010B refunding bonds

Prince George's County in Maryland had been slated to sell $176.62 million of series 2010 general obligation public improvement bonds competitively Tuesday, but it pulled the sale in the afternoon.

The vast majority of offerings on the calendar Tuesday were competitive, and this is not a coincidence, said one sellsider.

"We always wonder which method is better during which time," he said.

"It always boils down to getting the best pricing, and sometimes that means going competitive. In this market, it's tough to tell. Clearly, a lot of issuers think it's better to go competitive."

Dallas ISD brings BABs

Heading up the avalanche of new deals was an offering from the Dallas Independent School District of Texas, which competitively sold $950.3 million of series 2010C unlimited tax school building Build America Bonds (Aa2/A+/AA).

Barclays Capital Inc. won the bid with a subsidized true interest cost of 4.03%, said Jon Dahlander, spokesman for the district.

The bonds are due 2018 to 2026 with term bonds due 2030 and 2035. The serial coupons range from 4.05% to 6%. The 2030 bonds have a 6.3% coupon priced at 100.35. The 2035 bonds have a 6.45% coupon priced at 101.5.

Proceeds will be used to construct, equip, acquire, improve and renovate school buildings within the district.

Houston prices refunding bonds

Not all refundings were off the market Tuesday. The City of Houston sold $498 million of series 2010 public improvement refunding bonds (/AA/AA) through Jefferies & Co., said a pricing sheet.

The deal included $306.37 million of series 2010A bonds and $191.63 million of series 2010B bonds.

The 2010A bonds are due 2012 to 2023 with 2% to 5% coupons. The full details of the 2010A bonds were not available Tuesday evening. The 2010B bonds are due 2020 to 2024 with a term bond due 2030. Serial coupons range from 4.361% to 5.361%, all priced at par. The 2030 bonds have a 6.319% coupon priced at par.

Proceeds will be used to refund the city's series 2010A-C commercial paper notes.

South Carolina drives sale

Moving back to that South Carolina offering, the bond bank priced $191.85 million of series 2010A revenue bonds competitively. Calls to the issuer for the winning bidder were not returned Tuesday.

The bonds are due 2034 to 2036 with a term bond due 2040. The serial bonds all have 5.25% coupons. The 2040 bonds have a 5.375% coupon priced at 98.892.

Proceeds will be used to construct and repair transportation projects within the state.

New Mexico sells $140 million

Also during the session, the State of New Mexico priced $140.52 million of series 2010D severance tax refunding bonds, said a pricing sheet.

The bonds were sold competitively with Barclays winning the bid. The TIC came in at 1.92%.

The bonds are due 2012 to 2017 with 3% to 5% coupons.

Proceeds will be used to refund the state's series 2006A and 2007A severance tax bonds.

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