Municipals improve along with Treasuries as issues price; Washington state offers G.O. deal

By Sheri Kasprzak

New York, Feb. 9 – Municipals closed better Tuesday as Treasuries got a boost from weaker stocks, market insiders said.

Yields on top-rated municipals fell by 1 to 2 basis points, and Treasuries performed similarly.

Investors flocked to safety amid global economic fears, which sent stocks downward.

The 10-year Treasury note and 30-year bond yields ended the session 1 bp lower at 1.47% and 2.55%, respectively. The five-year note yield fell by 1 bp to 1.15%, but the two-year note yield rose by 3 bps to 0.69%.

The Dow Jones industrial average fell by 12.67 points to 16,014.38, and the Nasdaq ended 14.99 points lower at 4,268.76. The S&P 500 ended down 1.23 points at 1,852.21.

Washington brings G.O. bonds

Among the day’s larger offerings, Washington state priced $518,235,000 of series 2016 general obligation bonds.

The deal included $319.17 million of series 2016C various purpose bonds and $199,065,000 of series 2016D motor vehicle fuel tax bonds.

The 2016C bonds are due 2017 to 2041 with 5% coupons and yields from 0.38% to 2.88%.

The 2016D bonds are due 2017 to 2041 with 5% coupons and 0.39% to 2.90% yields.

The bonds (Aa1/AA+/AA+) were sold competitively. The issuer did not respond to calls for the winning bidder Tuesday.

Proceeds will be used to finance K-12 school renewal and replacement projects, facilities for state universities and community and technical colleges, state facilities projects, outdoor recreation facilities, state water supply development, flood mitigation and prevention, habitat conservation and farmland and riparian protection projects as well as to fund high-occupancy vehicle projects in Pierce County, widen Interstate 405, improve Interstate 90 at the Snoqualmie Pass East, improve and realign the North Spokane Corridor of U.S. 395 and improve Interstate 5 in Cowlitz and Lewis counties.

Wisconsin offers bonds

Also during the session, Wisconsin hit the market with $295,225,000 of series 2016-1 G.O. refunding bonds.

The bonds (Aa2/AA/AA) were sold through senior manager BofA Merrill Lynch.

The bonds are due 2019 to 2028 with 1.75% to 5% coupons and yields from 0.78% to 2.02%, a term sheet said.

Proceeds will be used to refund existing G.O. debt.

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