Municipals end cheaper out long despite stronger Treasuries; Minnesota brings $462.07 million

By Sheri Kasprzak

New York, Jan. 28 - Municipal yields were off, particularly out long, traders said during the busy primary session.

"Secondary is active, and we're also seeing the majority of the week's primary going today," a trader said.

"It's busy, but there's not a lot of pressure. Some longer maturities [in secondary] were cheaper. New issues seem to be coming in OK. Shorter bonds are little changed, but between 20 and 30 years, yields are up a basis point or two in spots."

The weaker session came in contrast to an improved Treasuries market, which enjoyed a boost after a successful auction of two-year notes. The five-year Treasury note yield fell by 3.5 bps to close at 1.555%, and the 10-year note yield fell by 2 bps to 2.746%. The 30-year bond yield fell by 1 bps to 3.671%.

During the session, the Treasury Department sold $32 billion of the two-year notes at a high yield of 0.38%, insiders reported. Bidders reportedly offered to buy 3.3 times the debt offered. The average for the past six sales has been 3.34 times, said one market source.

Minnesota brings debt

Heading up the day's primary action, one of the larger offerings of the week priced. The State of Minnesota sold $462,065,000 of series 2014 state general fund appropriation bonds.

The deal included $391,785,000 of series 2014A tax-exempt bonds and $70.28 million of series 2014B taxable bonds, said a pricing sheet.

The 2014A bonds are due 2015 to 2033 with term bonds due in 2038 and 2043. The serial coupons range from 2% to 5% with 0.20% to 4% yields. The 2038 bonds have a 4.125% coupon priced at par and a 5% coupon priced at 107.558 to yield 4.02%. The 2043 bonds have a 5% coupon and priced at 106.755 to yield 4.12%.

The 2014B bonds are due 2015 to 2029 with term bonds due in 2034 and 2043. The serial coupons range from 0.48% to 4.463% and all priced at par. The 2034 bonds have a 4.827% coupon, the 2043 bonds have a 5.077% coupon, and both priced at par.

The bonds were sold through senior manager RBC Capital Markets LLC.

Proceeds will be used to finance the replacement of the Hubert H. Humphrey Metrodome football stadium in Minneapolis.

Florida DOT sells bonds

Moving to the competitive calendar, the Florida Department of Transportation sold $138,145,000 of series 2014 seaport investment program revenue bonds. The offering was initially slated to price in November but was postponed.

The bonds (Aa3//AA) were sold through competitive bid with J.P. Morgan Securities LLC as the winner.

The bonds are due 2014 through 2043 with 2% to 5% coupons and 0.15% to 4.20% yields, according to a pricing sheet.

Proceeds will be used to finance seaport capital improvements.

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