Municipals weaker in secondary despite strong interest in primary; MTA brings $848.26 million

By Sheri Kasprzak

New York, Oct. 17 - Some weakness crept into the muni market as Treasuries posted some losses, despite the fact that new issues were strongly received, traders reported.

"We are seeing some investors backing off in secondary because of Treasury losses, but new issues are coming in strong," said one trader reached in the afternoon.

Yields were seen weaker by about a basis point or slightly more, especially at maturities outside of 10 years, said the trader.

Meanwhile, the largest offering of the week priced after seeing strong interest during retail order periods. The Metropolitan Transportation Authority of New York hit the market with $848.26 million of series 2012A dedicated tax fund refunding bonds, said a pricing sheet.

The bonds (//AA-) were sold through Wells Fargo Securities LLC, Jefferies & Co. and Loop Capital Markets LLC.

The bonds are due 2013 to 2031 with 2% to 5% coupons.

Proceeds will be used to refund the authority's series 2002A bonds and advance refund other debt.

During the retail order period, the bifurcated 2037 maturity was priced at a 4% coupon to yield 3.07% and a 5% coupon to yield 2.87%, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

Wisconsin offers G.O.s

In other pricing action Wednesday, the State of Wisconsin priced $293.07 million of series 2012B general obligation bonds, said a pricing sheet.

The bonds (Aa2/AA/) were sold competitively with Wells Fargo Bank, NA winning the bid, said David Erdman, debt manager with the state's Capital Finance Office. The true interest cost came in at 2.900411%.

The bonds are due 2022 to 2033 with 2.55% to 5% coupons.

"Based on the bid results and structure, the par amount of this issue has been reduced to $293.07 million," Erdman said Wednesday.

The state had originally planned to price $302.6 million.

Proceeds will be used to fund general government expenses.

Catholic Health deal ahead

Looking to upcoming offerings, Catholic Health Initiatives announced Wednesday that it plans to come to market with $1.5 billion of taxable bonds, the health care system's largest offering ever. The offering also represents one of the largest taxable bonds issued by a nonprofit health care organization, said a statement from the health system Wednesday.

The proceeds from the offering will be used to finance mergers, acquisitions and joint ventures as CHI creates new partnerships, said the statement.

Based in Englewood, Colo., Catholic Health operates 76 hospitals and other health care facilities in 19 states.

"The proceeds will allow this organization to truly fulfill its strategic goals to improve and expand health care in every community it serves," said Dean Swindle, the health care system's executive vice president for business services and chief financial officer, in the statement.

"It provides the flexibility we need to take advantage of future opportunities in a constantly changing health care environment."

This is the first time the health care system has issued long-term fixed-rate taxable bonds, said the statement. The health care system is taking advantage of the current low interest-rate environment.

Catholic Health recently saw its credit rating cut by all three ratings agencies. Fitch Ratings dropped the health care system to AA- from AA and Standard & Poor's to AA- from AA.

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