Municipals close unchanged; Virginia's Fairfax County IDA brings $350 million bonds for Inova

By Sheri Kasprzak

New York, July 31 - Municipal yields were largely flat on Tuesday despite stronger Treasuries and the fact that new issues started coming to market, traders reported.

It was the second straight session in which municipals underperformed Treasuries, something that could be a trend throughout August, said one trader.

"A jump in supply might change things, but if the supply level stays where it is now, I really think it could be a trend," the trader said.

Municipal-to-Treasury ratios have backed off from previous elevations, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"The 10-year MMD AAA benchmark finished 2 basis points higher at 1.66%, while the 30-year was unchanged at 2.84% [on Monday]," Schankel said on Tuesday.

Triborough leads calendar

The new issue calendar for the week will remain modest, Schankel said, and it will be led by a $1.15 billion sale from the Triborough Bridge and Tunnel Authority of New York.

"TB&T is a critical element in New York City's extensive transportation system with seven bridges and two tunnels," Schankel said of the authority.

"Surpluses from bridge and tunnel operations are used to subsidize the transit and commuter rail systems of parent Metropolitan Transportation Authority."

The authority is expected to price $1.15 billion of series 2012B general revenue refunding bonds later in the week through senior manager Goldman Sachs & Co.

Proceeds from the sale will be used to refund the authority's series 2002B general revenue bonds.

Fairfax IDA bonds price

Heading up the day's primary action, the Fairfax County Industrial Development Authority of Virginia brought to market $350 million of series 2012 health-care revenue bonds for Inova Health System, said a pricing sheet.

The deal included $290 million of series 2012A bonds and $60 million of series 2012B bonds.

The 2012A bonds are due 2013 to 2027 with term bonds due in 2032, 2035, 2037, 2040 and 2042. The serial coupons range from 2.25% to 5%. The 2032 bonds have a 3.625% coupon and priced at 98.952. The 2035 bonds have a 5% coupon and priced at 112.711. The 2040 bonds have a 5% coupon and priced at 111.659, and the 2042 bonds have a 4% coupon and priced at 99.477.

The 2012B bonds are due in 2022 with a 3% coupon priced at 105.62, a 4% coupon priced at 114.27 and a 5% coupon priced at 112.921.

Morgan Stanley & Co. LLC was the senior manager for the offering.

Proceeds will be used to finance new hospital additions.

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