Municipals close little changed as secondary action diminishes; Pennsylvania brings $950 million

By Sheri Kasprzak

New York, April 17 - Municipals closed flat on Tuesday as many new issues came to market, leaving the secondary market very quiet, traders reported.

The most volatile segment of the market - around 10-years - was seen firmer earlier in the session, one trader said, but as new offerings came down the pipeline, investors turned their attention elsewhere, leaving the overall market largely unchanged.

"Secondary was very, very quiet today," said the trader.

"We were getting some bids early in the day, and that seemed to build some strength around 10-years, but then it all dried up. There's just too much going on in the primary, and that's where the interest is today."

Leading those new issues was a $950 million offering of series 2012 general obligation bonds from the Commonwealth of Pennsylvania.

The bonds (Aa1//AA+) were sold competitively with Goldman, Sachs & Co. as the winning bidder.

The bonds are due 2013 to 2027 with 4% to 5% coupons and yields from 0.42% to 2.87%, said one market insider familiar with the offering.

Proceeds will be used to construct, acquire and rehabilitate capital facilities, improve sewage treatment systems and maintain and protect environmental projects, including open space and farmland preservation projects.

Virginia College prices

Elsewhere in the primary market on Tuesday, the Virginia College Building Authority came to market with $335,075,000 of 21st Century College and Equipment Programs series 2012A educational facilities revenue bonds, said a pricing sheet.

The bonds were sold competitively with Citigroup Global Markets Inc. winning the bid with a 2.856% true interest cost, said Evelyn Whitley, the debt manager for the Virginia Treasurer's Office.

The bonds are due 2013 to 2032 with 3% to 5% coupons.

Proceeds will be used to finance capital improvements and equipment purchases at higher educational facilities within the commonwealth.

"Approximately $56 million of the bond proceeds will fund the equipment program - an annual authorization to state colleges and university for educational and research equipment," said Whitley in an interview on Tuesday.

"This portion of the issue will be amortized for seven years. The remaining bonds will fund ongoing capital improvements for the colleges and universities."

Rochester brings deal

In other competitive offerings, the City of Rochester, Minn., sold $60.84 million of series 2012A wastewater refunding revenue bonds, said a pricing sheet.

The bonds (Aaa) were sold competitively with J.P. Morgan Securities LLC winning the bid, said Dale Martinson, the city's finance director in an interview on Tuesday. The true interest cost came in at 2.1501%.

The bonds are due 2016 to 2026 with 4% to 5% coupons.

Martinson told Prospect News that the city is not required to sell its debt competitively, and current market conditions were a factor in its decision to sell competitively.

The pricing terms on Tuesday's sale were favorable, Martinson said. "We have not sold since 2010. That issue's TIC was 2.977%. However, the final term was a little longer for that issue."

Proceeds will be used to refund existing wastewater debt.

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