Municipals improve inside 10 years despite Treasury gains; Grand Parkway prices $3.13 billion

By Sheri Kasprzak

New York, July 17 - Municipal yields were down slightly 10 years and in on Wednesday, market insiders reported, even as Treasuries improved.

One trader noted during the session that although secondary action did pick up, that action was mostly among short bonds.

Although some investors are back in the market, the volatility seen recently has been difficult for institutions.

Grand Parkway's $3.13 billion

The week's largest deal hit the market on Wednesday. Grand Parkway Transportation Corp. of Texas sold $3,132,235,000 of series 2013 Grand Parkway system toll revenue bonds.

The bonds (/AA/AA-) were sold through Goldman Sachs & Co.

The offering included $200 million of series 2013A first-tier toll revenue bonds, $1,137,935,000 of series 2013B subordinated tier toll equity loan agreement-supported bonds, $836.44 million of series 2013C subordinated tier toll equity loan agreement-supported bonds, $489.16 million of series 2013 convertible capital appreciation bonds, $361.81 million of series 2013D subordinated tier toll equity loan agreement-supported bonds and $106.89 million of series 2013E subordinated tier toll equity loan agreement-supported bonds.

Yields from 0.80% to 5.85%

The 2013A bonds are due 2043 and 2053. The 2043 bonds have a 5.125% coupon and priced at 98.25 to yield 5.241%. The 2053 bonds have a 5.5% coupon and priced at 98.5 to yield 5.594%.

The 2013B bonds are due 2051 and 2053. The 2051 bonds have a 5.25% coupon and priced at 101.171 to yield 5.10%, and the 2053 bonds have a 5% coupon and priced at 97 to yield 5.178%.

The 2013C bonds are due Oct. 1, 2017, have a 2% coupon and priced at 100.779 to yield 0.55%.

The 2013 capital appreciation bonds are due 2029 to 2036 and 2044 to 2048 with 0% coupons and yields from 4.95% to 5.85%.

The 2013D bonds are due Oct. 1, 2042, have a 5.184% coupon and priced at par.

The 2013E bonds are due Oct. 1, 2017, have a 1% coupon and priced at 100.107 to yield 0.80%.

"The first-tier toll revenue [bonds] priced as a 5.5% to yield 5.62% in 2053, while the sub-tier, with some backing, priced as 5% to yield 5.18% in 2053," said Alan Schankel, managing director with Janney Montgomery Scott LLC.

Proceeds will be used to acquire, construct and develop the Grand Parkway System, which runs through Harris, Fort Bend, Brazoria, Galveston, Montgomery, Liberty and Chambers counties in Texas.

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