Munis Unchanged as Large Deals Price

The municipal market was unchanged to slightly firmer yesterday, as many of the week’s largest deals were priced in the new-issue market.

“There’s some decent activity in the secondary,” a trader in New York said. “We’re feeling a bit firmer at this point. I wouldn’t say there’s a ton of movement, but you can pick up a basis point or two, depending on what you’re trading.”

In the new-issue market yesterday, Goldman, Sachs & Co. priced $1.2 billion of Project J bonds for the Municipal Electric Authority of Georgia, which consist of more than $1.1 billion of taxable Build America Bonds and a portion of tax-exempt debt.

Pricing information was not available by press time. The Project J bonds were slated to mature from 2018 to 2057, and the $26.6 million of tax-exempt bonds were scheduled to mature from 2017 to 2021 and in 2040.

There are also Project M bonds that total $972.9 million and consist of $953.2 million of taxable BABs in Series 2010A to mature from 2019 to 2057, and $19.7 million of tax-exempt bonds in Series 2010B to mature from 2017 to 2029 and in 2040. These bonds may price as early as today.

The MEAG deal also includes Project P bonds that total $419.1 million, and will price at a later date. They are structured as $410.8 million of taxable BABs in Series 2010A to mature from 2018 to 2057, and $8.24 million of tax-exempts in Series 2010B maturing from 2017 to 2020 and in 2040.

The Series J and M bonds are expected to be rated A2 by Moody’s Investors Service and A-plus by Standard & Poor’s and Fitch Ratings. The Series P bonds are rated Baa2 by Moody’s and A-minus by Standard & Poor’s and Fitch.

Proceeds from the billion-dollar sale will be used to finance the construction of new projects, including MEAG’s share of two new nuclear units at its Plant Vogtle facility.

RBC Capital Markets priced $599.4 million of bonds for the Dormitory ­Authority of the State of New York in two series, including $190.6 million of taxable  BABs.

The BABs mature from 2010 through 2030. Yields were not yet available, but the bonds were priced to yield between 70 and 150 basis points over the comparable Treasury yield. They contain a make-whole redemption at Treasuries plus 25 basis points.

The $374.3 million tax-exempt series matures from 2011 through 2031, with yields ranging from 0.77% with a 3% coupon in 2012 to 4.31% with a 4.25% coupon in 2031. Bonds maturing in 2011 were decided via sealed bid.

The deal also contains a $34.5 million taxable series.

The credit is rated AAA by Standard & Poor’s and AA-minus by Fitch.

The Treasury market showed some losses yesterday. The benchmark 10-year note was quoted near the end of the session with a yield of 3.65% after opening at 3.60%. The yield on the two-year finished at 0.82% after opening at 0.79%. The yield on the 30-year bond finished at 4.60%, after opening at 4.57%.

The Municipal Market Data triple-A scale yielded 2.83% in 10 years and 3.80% in 20 years yesterday, matching Tuesday’s levels. The scale yielded 4.16% in 30 years yesterday, also matching Tuesday.

Tuesday’s triple-A muni scale in 10 years was at 78.7% of comparable Treasuries and 30-year munis were at 91.0%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 95.2% of the comparable London Interbank Offered Rate.

Elsewhere in the new-issue market, Wells Fargo Securities priced $331.4 million of revenue financing system bonds for the University of Texas System Board of Regents.

The bonds mature from 2012 through 2024, with yields ranging from 0.66% with a 4% coupon in 2012 to 3.41% with a 5% coupon in 2024.

The bonds are callable at par in 2020, except bonds maturing in 2020, which are not callable. The credit is rated triple-A by all three major ratings agencies.

Bank of America Merrill Lynch priced $140 million of single-family mortgage revenue bonds for the Pennsylvania Housing Finance Agency in two series.

Bonds from the $9.2 million Series A mature in 2014 and 2015, both with split maturities, yielding 1.875% and 1.95% in 2014, and 2.30% and 2.35% in 2015, all priced at par. These bonds are not ­callable.

Bonds from the $130.8 million Series B mature from 2010 through 2021, with term bonds in 2024, 2025, and 2028. Yields range from 0.375% in 2010 to 4.75% in 2028, all priced at par. These bonds are callable at par in 2019.

The credit is rated Aa2 by Moody’s and AA-plus by Standard & Poor’s.

Piper Jaffray & Co. priced $120 million of bonds for Kauai County, Hawaii, including $107.8 million of taxable BABs.

The BABs mature from 2013 through 2033, with yields ranging from 1.96%, or 1.27% after the 35% federal subsidy, to 5.76%, or 3.74% after the subsidy, all priced at par. The bonds were priced to yield between 23 and 130 basis points over the comparable Treasury yield.

The deal also contains $12.2 million of general obligation recovery zone economic development bonds, which mature in 2033 and 2034, yielding 5.86% and 5.91%, respectively. The bonds were priced to yield 130 and 135 basis points over the comparable Treasury yield.

All the bonds contain a make-whole call at Treasuries plus 15 basis points. The credit is rated Aa3 by Moody’s, AA by Standard & Poor’s, and AA-minus by Fitch.

In economic data released yesterday, the Institute for Supply Management’s non-manufacturing business activity composite index was 53.0 in February, up from 50.5 in January. Economists polled by ­Thomson Reuters had expected a 51.0 level.

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