Municipals post gains along with improved Treasuries; Denver brings $121.63 million G.O. bonds

By Sheri Kasprzak

New York, Sept. 24 - Municipals closed out Tuesday firmer as some of the substantial primary deals of the week were met with a solid reception and Treasuries rallied, market sources said.

Secondary action was decent, said a trader, but the market was really pushed a great deal by the pricing of $121.63 million of general obligation bonds by the City and County of Denver. The triple-A rated paper received a tight cover bid, a market source reported, with 14 bidders in on the deal.

The bonds are due 2014 to 2027 and 2029 to 2030 with 3% to 5% coupons. BofA Merrill Lynch took the winning bid for the offering at a 2.147117% true interest cost.

The city intends to use the proceeds to advance the voter-authorized Better Denver bond program and refund some of the outstanding maturities of the city's series 2002 and 2003A-B G.O. bonds.

Munis show modest MTD recovery

Meanwhile, the U.S. muni market was modestly better for the month to date, said J.R. Rieger, vice president of fixed-income indexes with S&P Dow Jones Indices.

The investment-grade tax-exempt bonds tracked in the S&P National AMT-Free Municipal Bond index saw a positive 2.04% total return for the month to date, said a report released by Rieger Tuesday, but the index is down 3.66% for the year to date.

Puerto Rico bonds, Rieger said, have been a drag on the market since July, with the S&P Municipal Bond Puerto Rico index down 14.48% for the year to date. On a month-to-date basis, however, that index rebounded, showing a 1.66% positive return.

Tobacco bonds, which have also been traditionally tough on the overall market, are also having a good September, Rieger said, with the S&P Municipal Bond Tobacco index recording a positive 5.9% return during the month so far but a negative 4.37% for the quarter. For the year to date, the index has returned a negative 7.2%.

U of California deal ahead

Looking to Wednesday's action, the University of California is slated to price for institutions $2.6 billion of series 2013 general revenue bonds in four tranches through Barclays.

The offering includes $700 million of series 2013AI bonds, $700 million of series 2013AJ taxable bonds, $600 million of series 2013AK bonds and $600 million of series 2013AL variable-rate demand bonds.

The proceeds from the bonds (Aa1/VMIG 1//AA+) will be used to refund and restructure about $2.4 billion of outstanding California State Public Works Board lease revenue bonds.

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