Municipals improve, underperform rallying Treasuries; Dasny prepares personal income tax bonds

By Sheri Kasprzak

New York, Feb. 13 - Municipals improved again on Thursday, but this time, munis underperformed a rallying Treasuries market, insiders reported.

Throughout the week, municipals have outperformed Treasuries, but Treasuries got a boost from some economic data and the auction of 30-year bonds.

Municipal yields were firmer, particularly around 10 years, insiders said, thanks in part to the improved Treasuries and heavy secondary activity in Puerto Rico debt.

Yields were better by 1 basis point to 4 bps.

Meanwhile, the five-year Treasury note yield shrank by 6.5 bps to 1.503%, and the 10-year note yield fell by 6 bps to 2.724%. The 30-year bond yield fell by 4 bps to 3.683%.

Dasny organizes bond offering

Looking ahead, the Dormitory Authority of the State of New York announced its plans to price up to $850 million of series 2014 state personal income tax revenue bonds on March 12 with a retail order period set for March 11.

The deal will include $800 million of tax-exempt fixed-rate refunding bonds and may include up to $50 million of taxable fixed-rate bonds, said a statement from the authority.

The bonds (/AAA/AA) will be sold through senior manager Citigroup Global Markets Inc.

Proceeds will be used to refund higher-interest bonds, according to the statement.

"The governor's budgets have embraced the principle that state spending must grow more slowly than the overall economy, both to assure that the state prudently uses the resources granted to it and to leave more money in the hands of the people," New York budget director Robert Megna said.

"We are encouraged that this principled approach and our long-term fiscal planning are being recognized by the rating agencies, all three of which have placed New York State on positive credit watch."

Minneapolis brings G.O. bonds

Amid Thursday's primary activity, the City of Minneapolis hit the market with $61,905,000 of series 2014 Downtown East project taxable general obligation bonds.

The bonds (/AAA/AAA) were sold through Wells Fargo Securities LLC.

The bonds are due 2017 to 2029 with term bonds due in 2034 and 2044, said a pricing sheet. The serial coupons range from 0.95% to 4.114% with yields from 0.95% to 4.114%. The 2034 bonds have a 4.379% coupon and priced at par. The 2044 bonds have a 4.629% coupon and priced at par.

Proceeds will be used to finance a mixed-use development project for downtown Minneapolis.

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