Municipals improve as investors flock to safe havens; Washington University sells taxable debt

By Sheri Kasprzak

New York, July 29 – Municipal yields were lower on the session as investors gobbled up municipals, particularly in the secondary market, traders reported.

Yields fell by 2 to 3 basis points, generally keeping pace with Treasuries, which got a boost from the successful auction of some short-term notes.

“Trading is definitely brisk, and we are still seeing a lot of interest in new issues,” said a trader during the session.

“A lot of what we’re seeing is investors seeking out safe haven investments given a lot of foreign turmoil.”

In municipal action, several smaller offerings priced, with the larger deals slated to price Wednesday and Thursday.

Over in Treasuries, the 30-year bond yield fell by 3.5 bps to end the day at 3.226%, and the 10-year note yield fell by 2.5 bps at 2.465% following the auction of five-year notes. The five-year note yield fell by 1.5 bps at 1.688%.

Washington University’s bonds

Amid the taxable offerings from the session, the Missouri Health and Educational Facilities Authority hit the market with $150 million of series 2014A taxable educational facilities revenue bonds for Washington University.

The bonds (Aaa) were sold through J.P. Morgan Securities LLC and Wells Fargo Securities LLC.

The bond are due Oct. 15, 2044 and have a 4.072% coupon priced at par, said a pricing sheet.

Proceeds will be used to construct a student housing facility at the university’s Danforth campus, construct an ambulatory care center and expand health and educational facilities.

Virginia Resources sells debt

Also during the day, the Virginia Resources Authority priced $132.97 million of series 2014B infrastructure and state moral obligation revenue bonds.

The deal included $90,885,000 of series 2014B infrastructure bonds (Aaa/AAA/) and $42,085,000 of series 2014B state moral obligation bonds (Aa2/AA/), said pricing sheets.

The infrastructure bonds are due 2014 to 2038 with 1.25% to 5% coupons.

The state moral obligation bonds are due 2014 to 2036 with a term bond due in 2038. The serial coupons range from 3% to 5% with yields from 0.12% to 3.52%. The 2038 bonds have a 4% coupon priced at 103.389 to yield 3.6%.

The bonds were sold on a negotiated and competitive basis. Loop Capital Markets LLC and Citigroup Global Markets Inc. were the lead managers for the infrastructure bonds. The winning bidder for the state moral obligation bonds was unavailable by press time Tuesday.

Proceeds will be used to purchase series 2014B local obligations issued by local governments.

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