Municipals fall in sympathy with Treasuries; Illinois State Toll Highway brings $400 million

By Sheri Kasprzak

New York, July 9 – Municipals ended the session weaker after a week of higher prices, market insiders said, falling in sympathy with a weaker Treasuries market.

Yields on top-rated municipals were higher by as much as 4 basis points, far outperforming Treasuries. The 30-year Treasury bond yield rose by 12 bps to close the day at 3.11%, and the 10-year benchmark note yield climbed by 10 bps to 2.32%. The five-year note yield rose by 8 bps to 1.58%.

Both markets were pressured by a strengthening stock market.

Illinois highway bonds price

Heading up the day’s primary action, the Illinois State Toll Highway Authority hit the market with $400 million of series 2015A toll highway senior revenue bonds, the week’s second-largest offering.

The bonds (Aa3//AA-) were sold through BofA Merrill Lynch and William Blair & Co.

The bonds are due 2027 to 2037 with a term bond due in 2040, according to a term sheet. The serial bonds have 5% coupons. The 2040 bonds have a 5% coupon priced at 109.404.

Proceeds will be used to fund capital projects as part of a 15-year capital program.

The authority last hit the market in December with $264,555,000 of bonds with maturities from 2018 to 2025. The bonds have 5% coupons and yields from 0.84% to 2.63%.

Vernon brings debt

In other new-issue activity, the City of Vernon, Calif., sold $112.98 million of series 2015 electric system revenue bonds. The deal was upsized from $110 million.

The bonds (/A-/) were sold through senior managers J.P. Morgan Securities LLC and Citigroup Global Markets Inc.

The bonds are due 2022 to 2026 with 4.05% to 4.85% coupons, according to a pricing sheet.

Proceeds will be used to finance capital improvements to the city’s electric system, as well as to refund its series 2009 revenue bonds.

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