Munis struggle as Treasuries fall; Triborough Bridge and Tunnel brings $607.36 million bonds

By Sheri Kasprzak

New York, Oct. 4 - Municipals suffered through a rough session, market insiders reported, as Treasuries took a hit and low yields kept investors out of the secondary market.

"There's a lot of supply pressure on yields today," said one trader reached Tuesday afternoon.

The trader noted that spreads on new issues coming to market Tuesday were wide compared to benchmarks. Short and intermediate yields, as a result, were pushed higher in the afternoon. Fifteen-year bonds took the worst hit. Yields on 15-year bonds were seen up by 7 basis points. Ten-year yields were up almost 4 bps, and two-year yields were up more than 2 bps. The one firmer spot of the market was out long. Thirty-year yields were down nearly 3 bps, said the trader.

Alan Schankel, managing director with Janney Montgomery Scott LLC, said Tuesday that municipal/Treasury ratios reached another high point for the year.

In the 10-year sector, the yield for AAA-rated munis is 127% of that offered by Treasuries, Schankel wrote in a report released in the morning.

"The ratio in 30 years is 130%. The week's new issue slate stands above $9 billion, a hefty calendar, continuing the high-volume pace of recent weeks. As tax-free yields have begun to turn up, issuers are pushing to lock in refunding deals, which accounted for about 50% of September's $27.4 billion of new issues."

Triborough Bridge bonds price

Heading up the busy primary slate Tuesday, the Triborough Bridge and Tunnel Authority of New York priced $607.355 million of series 2011A general revenue bonds, said a pricing sheet.

The bonds were sold through Morgan Stanley & Co. LLC and Rice Financial Products Co.

The bonds are due 2013 to 2028 with coupons from 2% to 5%. The full pricing details were unavailable by press time Tuesday evening.

Proceeds will be used to refund the authority's series 2001A and 2002A general revenue bonds.

Dasny brings PITs

Also during the session, the Dormitory Authority of the State of New York priced $514.365 million of series 2011 state personal income tax revenue bonds, said a pricing sheet.

The bonds were sold competitively with Wells Fargo Securities LLC as the winning bidder.

The offering was comprised of $466.035 million of series 2011E tax-exempt bonds and $48.33 million of series 2011F taxable bonds.

The 2011E bonds are due 2012 to 2031 with term bond due in 2033, 2034, 2038, 2040 and 2041. The serial coupons range from 4% to 5%. The 2033 bonds have a 5% coupon and priced at 116.713, and the 2034 bonds have a 4.125% coupon and priced at 98.496. The 2038 bonds have a 5% coupon and priced at 118.197. The 2040 bonds have a 4.5% coupon and priced at 104.983, and the 2041 bonds have a 4.25% coupon and priced at 98.992.

The 2011F bonds are due 2012 to 2021 with 0.5% to 3.05% coupons. They all priced at par.

Proceeds will be used to finance grants to libraries and state and voluntary agency facilities; to construct a state court officers' training academy; to implement a state longitudinal data system; and to fund economic development grants under various programs.

Florida BOE sells PECO bonds

In other competitive offerings, the Florida Board of Education brought $241.825 million of series 2011D public education outlay refunding bonds, said a pricing sheet.

The bonds were sold competitively with Bank of America Merrill Lynch as the winning bidder.

The bonds are due 2022 to 2025 with 5% coupons across the board.

Proceeds will be used to refund existing PECO bonds.

Chicago BOE deal ahead

Another board of education offering is coming up on the horizon. The Board of Education of the City of Chicago is expected to bring to market $398.415 million of series 2011A unlimited tax general obligation bonds, said a preliminary official statement. Pricing is expected during the week of Oct. 17.

The bonds (Aa3/AA-/A+) will be sold through senior manager Jefferies & Co. Inc.

The bonds are due 2035 to 2041.

Proceeds will be used to fund capital improvements to school facilities throughout the district.

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