Municipal yields seen lower; Washington brings $1.16 billion of G.O. bonds in upsized deal

By Sheri Kasprzak

New York, May 25 - Municipal yields improved on Tuesday as a healthy supply of new deals came to market, insiders reported.

"Yields are probably down anywhere from 1 to 5 basis points pretty much across the curve," said one trader reached in the afternoon.

"It's still kind of slow [in secondary], but it has picked up since last week. It's a combination of things. Fears over Europe's situation are, of course, a big issue, but there's also quite a bit going on in primary."

Meanwhile, the State of Washington brought to market its largest-ever bond offering - $1.156 billion in series 2010F motor vehicle fuel tax general obligation bonds - on Tuesday, said a pricing sheet. The offering was upsized from $1.1 billion.

The sale was conducted through J.P. Morgan Securities Inc. and is the fourth-largest Build America Bond deal.

"We feel like the fact that it was upsized speaks volumes about this deal and the demand for BABs in general," said one sellsider connected to the offering.

"Pricing came about where we had anticipated. We're thrilled with it. This is a landmark deal for them, and we think pricing came at a fair level for them."

The bonds (Aa1/AA+/AA+) are due 2015 to 2024 with term bonds due 2031, 2033 and 2040. The coupons range from 2.76% to 4.669%, all priced at par. The 2031 bonds have a 5.04% coupon, priced at par, and the 2033 bonds have a 5.09% coupon, also priced at par. The 2040 bonds have a 5.14% coupon, priced at par.

Proceeds will be used to reimburse the state for highway and transportation improvements.

Farmington, N.M., sells

Elsewhere during the pricing session, the City of Farmington, N.M., sold $343.55 million in series 2010 pollution control refunding revenue bonds on Tuesday, said a pricing sheet.

The sale included $40.05 million in series 2010A bonds, $37 million in series 2010B bonds, $65 million in series 2010C bonds, $130 million in series 2010D bonds, $60 million in series 2010E bonds and $11.5 million in series 2010F bonds.

The bonds (//A+) were sold on a negotiated basis with JPMorgan as the lead manager.

All of the bonds are due June 1, 2040, and all priced at par. The 2010A bonds have a 5.2% coupon, the 2010B bonds have a 4.75% coupon, and the 2010C bonds have a 5.9% coupon. The 2010D bonds and 2010E bonds have 5.9% coupons as well. The 2010F bonds have a 6.25% coupon.

Proceeds will refund existing pollution control revenue bonds.

Utah water bonds price

In other news, the Central Utah Water Conservancy District sold $233 million in series 2010A water conservancy revenue Build America Bonds, said a term sheet.

The bonds (/AA+/AA+) were sold through George K. Baum & Co.

The bonds are due 2020 to 2031 with a term bond due 2040. The serial coupons range from 4.15% to 5.66%, all priced at par. The 2040 bonds have a 5.7% coupon, priced at par.

Proceeds will be used to fund capital improvements as well as defease the district's series 2009 bond anticipation notes.

The district, based in Orem, is a wholesale water provider.

Nashville deal planned

Out on the horizon, the Metropolitan Government of Nashville and Davidson County in Tennessee is set to sell $575 million in series 2010 G.O. bonds, according to a preliminary official statement.

The sale includes $275 million in series 2010A G.O. improvement and refunding bonds, $250 million in series 2010B Build America Bonds and $50 million in series 2010C taxable G.O. refunding bonds.

Goldman, Sachs & Co. is the lead manager for the negotiated deal.

The 2010A bonds are due 2015 to 2025, and the 2010B bonds are due July 1, 2034. The 2010C bonds are due 2013 to 2015.

Proceeds from the 2010A bonds will be used to retire the government's series 2010A commercial paper, which provided short-term financing to construct, acquire, equip and renovate capital projects. The remainder of the 2010A proceeds will be used to refund the government's series 1999 G.O. public improvement and refunding bonds, series 2001A G.O. multipurpose improvement bonds, series 2003 G.O. multipurpose bonds, series 2004 G.O. multipurpose bonds, series 2005A and 2005C G.O. bonds, series 2006B G.O. bonds, series 2007A G.O. refunding bonds and series 2008 G.O. bonds.

Proceeds from the 2010B bonds will be used to retire the government's series 2010B commercial paper.

The 2010C proceeds will be used to refund the government's series 1996 G.O. refunding bonds, series 2001B G.O. multipurpose refunding bonds, series 2002A-B G.O. energy production facility refunding bonds, series 2002 G.O. multipurpose refunding bonds, series 2004 G.O. public improvement refunding bonds, series 2005B G.O. refunding bonds and series 2007A G.O. refunding bonds.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.