Yields drop by up to 10 bps as Treasuries get boost; Sacramento County Sanitation brings sale

By Sheri Kasprzak

New York, Aug. 2 - Municipal yields improved along with Treasuries on Tuesday. Muni yields were seen better by as much as 10 basis points, said traders.

Five-year yields dropped by more than 10 bps, seven-year bonds were down 8 bps, and 10-year bonds wee down nearly 9 bps, said one trader reached during the session.

Treasury yields, however, dipped by even more. Thirty-year Treasury yields were down 17 bps on the day, with yields down from 4bps to 17 bps across the curve.

Alan Schankel noted Tuesday that munis have been hard-pressed to keep pace with rallying Treasuries. Municipals-to-Treasuries ratios have inched higher, he wrote, adding that muni yields hit 87% of Treasury yields in the 10-year area.

"This week's issuance calendar is light, posing little challenge to post-D.C. debacle demand, assuming all is signed, sealed and delivered on time," Schankel wrote.

Sacramento prices deal

Heading up Tuesday's light primary action, the Sacramento County Sanitation Districts Financing Authority of California brought $77.18 million of series 2011A revenue refunding bonds, said a pricing sheet.

The bonds (Aa3/AA/AA-) were sold through Stone & Youngberg.

The bonds are due 2022 to 2027 with 4% to 5% coupons.

Proceeds will be used to redeem the authority's series 2001 revenue bonds.

Waterford sells G.O.s, BANs

Elsewhere during the session, the Town of Waterford, Conn., sold $65.35 million of series 2011 general obligation bonds and G.O. bond anticipation notes, said a pricing sheet.

The offering included $51.35 million of series 2011 G.O. BANs and $14 million of series 2011 G.O. bonds.

The BANs are due March 20, 2012 and have a 1% coupon priced at 100.492. The G.O. bonds are due 2012 to 2030 with 2% to 4% coupons.

The bonds (Aa2/AA/) and BANs (MIG 1/SP-1+/) were sold competitively.

Proceeds will be used to retire the town's BANs maturing on Aug. 11, 2011.

New Hampshire deal set

Looking to upcoming offerings, the New Hampshire Higher Education Loan Corp. is prepared to bring to market $522.635 million of series 2011-1 taxable student loan-backed Libor floating-rate notes, said a preliminary official statement.

The offering includes $213 million of series 2011-1-A1 notes, $127 million of series 2011-1-A2 notes and $182.635 million of series 2011-1-A3 notes.

The notes (/AAA/AAA) will be sold on a negotiated basis with RBC Capital Markets LLC and UBS Investment Bank as the joint lead managers.

The 2011-1-A1 notes are due Oct. 25, 2021, the 2011-1-A2 notes are due Oct. 25, 2025, and the 2011-1-A3 notes are due Oct. 25, 2037.

Proceeds will be used to finance student loans and to redeem existing notes.

Based in Nashua, the corporation provides and services student loans.

Central Falls goes bankrupt

In broader muni news, Central Falls, R.I., filed for Chapter 9 bankruptcy on Monday.

"This comes as no surprise since the town, just north of Providence, has been struggling for some time," Schankel said Tuesday.

"With the financial problems of Central Falls in mind, Rhode Island's governor signed legislation earlier this year mandating that G.O. bonds issued by municipalities in the state be paid first from property taxes and other general funds. With regard to Central Falls, G.O. debt payments should take priority in the bankruptcy process, but a judge with have the final say."

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