New York City sold $883 million of general obligation bonds today, $400 million more than initially planned, in the week’s largest U.S. municipal debt offering, as benchmark yields held steady.

New York boosted the size of its transaction to finance capital projects and refinance debt for a third day, after the city sold $454 million of the deal to individual investors, according to a news release from the city. Institutional buyers such as mutual funds placed 1.8 times as many orders as there were bonds available to them today.

Underwriters, led by Morgan Stanley, raised prices and cut yields on the 2036 tax-exempt bond maturity three basis points to 5.55 percent, based on data compiled by Bloomberg. A basis point is 0.01 percentage point.

“They seemed to have gotten pretty good demand on the long end,” said Dan Solender, who oversees more than $9 billion as director of municipal bond management at Lord Abbett & Co. in Jersey City, New Jersey.

Yields on top-rated state and local government bonds due in 10 years held at 3.44 percent today, compared with 2009’s average of 3.47 percent, according to a daily survey by Municipal Market Advisors of Concord, Massachusetts.

Washington state sold almost $480 million of tax-exempt bonds today in the week’s largest municipal debt auction.

The state attracted five bidders to a $441 million issue, which JPMorgan Chase & Co. won with an interest cost of 4.535 percent, State Treasurer James McIntire said in a release. The smaller portion was bought by Morgan Stanley at 4.5586 percent.

Washington Offering

The proceeds from Washington’s second general obligation bond auction in three months will fund construction and renovation at colleges, universities and schools.

The deal will also pay for building two new state ferries to replace vessels more than 75 years old and finance improvements for ferry terminals at Orcas Island, Vashon Island and Port Townsend, according to the release.

The last time Washington auctioned long-term bonds backed by its full faith and credit pledge in January, JPMorgan Chase & Co. was the winning bidder with interest costs of 4.557 percent and 4.565 percent on the two-part sale.

Source: Bloomberg News