Munis soften 10 years and out; Massachusetts School Building Authority brings $766.14 million

By Sheri Kasprzak

New York, June 20 - Municipals closed out the session softer for maturities 10 years and out, traders reported. High-grade names, in particular, were hit hard, said one trader.

"The bids are really hit and miss, especially outside of 10 years," the trader said.

"There's some firmness, but it's mostly short bonds. Primary is still taking most of the attention, but it's probably going to calm down a little bit the next couple of days."

Leading the day's action, the Massachusetts School Building Authority came to market with $766.14 million of series 2012A dedicated sales tax refunding bonds.

The bonds (Aa1/AA+/AA+) were sold through senior managers Citigroup Global Markets Inc., Jefferies & Co. and J.P. Morgan Securities LLC.

The bonds are due 2021 to 2027 with a term bond due in 2030. The serial coupons range from 3% to 5%. The 2030 bonds have a 5% coupon and priced at 116.6.

Yields were adjusted on those bonds slightly higher in the 10-year range and lower in 2030, which was reportedly oversubscribed by three times at 5% to yield 3.06%, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

Proceeds will be used to refund the authority's series 2005A dedicated sales tax bonds.

School districts face pressure

Schankel noted on Wednesday that school district in many state are facing pressure due to state aid reductions and lower property tax revenues.

He pointed to Ticonderoga Central School District of New York's recent downgrade by Moody's Investors Service to A2 from A1 with a negative outlook.

"Over the past two years, the district's fund balance has fallen from 12.5% to 5% of revenues as declining state aid payments and increased health-care costs generated operating deficits," Schankel wrote.

Charles County details sale

Elsewhere, Charles County, Md., came to market with $55.24 million of series 2012 general obligation public improvement and refunding bonds.

The deal included $51.24 million of series 2012 tax-exempt consolidated public improvement and refunding bonds and $4 million of series 2012 taxable public improvement bonds.

The tax-exempt bonds are due 2013 to 2032 with 2% to 5% coupons. The taxable bonds are due 2013 to 2027 with 2% to 3.25% coupons.

The bonds (//AAA) were sold competitively. J.P. Morgan Securities LLC was the winner for the tax-exempt bonds and Robert W. Baird & Co. won the bid for the taxable bonds, said Crystal Harris, spokeswoman for the county. The combined true interest cost was 2.11%, said Harris.

"The county does a competitive bid for this process," Harris explained Wednesday.

Proceeds will be used to finance improvements to certain public buildings, facilities and grounds in the county and refund existing G.O. bonds.

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