Municipals remain unchanged to slightly cheaper; Chicago reprices $399.59 million water bonds

By Sheri Kasprzak

New York, May 10 - Municipal yields were seen slightly cheaper to flat on Thursday as new-issue action tapered off and bonds were seen repricing to lower yields, market insiders reported.

High-grade bonds were still seeing a lot of interest in the secondary market, said one trader, keeping the market from slipping too far.

"There's a cheaper feeling to some segments of the market, mostly intermediate bonds," the trader said.

"Some bonds are repricing at lower yields, and that might be causing some problems in the middle."

The market's technicals are little changed, according to Alan Schankel, managing director with Janney Montgomery Scott LLC. He said Thursday that new issue supply is low, especially for new money deals. Inflows to mutual funds are still steady, and reinvestments from maturing and called bonds are "creating a lopsided balance which should favor muni performance in coming weeks and months, likely to be reflected in lower ratios," he wrote.

Chicago reprices water bonds

Moving to the primary action, the City of Chicago priced and repriced $399.59 million of series 2012 senior lien water revenue project and refunding bonds.

The bonds (Aa3/AA-/AA) are due 2016 to 2032 with term bonds due in 2037 and 2042. The serial coupons range from 4% to 5%. The 2037 bonds have a 4% coupon and priced at 100.593, and the 2042 bonds have a 5% coupon and priced at 111.645.

The bonds were repriced to lower yields for almost all of the maturities, said one trader reached during the session.

The offering was also downsized from $435 million.

The bonds were sold through Siebert Brandford Shank & Co. LLC.

Proceeds will be used to finance capital improvements and extensions to the water system and to refund existing debt.

Marta deal ahead

Looking to the coming week, the Metropolitan Atlanta Rapid Transit Authority is gearing up to price $327.01 million of series 2012 sales tax revenue bonds (Aa3/AA+/). The bonds will be sold competitively on Monday.

The offering includes $306.63 million of series 2012A refunding bonds, which are due 2021 to 2040, and $20.38 million of series 2012B refunding bonds, which are due 2015 to 2020.

Proceeds will be used to refund all of the authority's series 2007C-1, 2007C-2 and 2007D-1 commercial paper notes.

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