Municipals flat ahead of massive $10.2 billion calendar; Port Authority readies debt offering

By Sheri Kasprzak

New York, April 13 – Municipals ended a quiet day mostly unchanged as the market awaited one of the larger new-issue calendars of the year with $10.2 billion ahead, traders said.

Yields across the curve were flat even as Treasuries edged up a bit.

Meanwhile, fund flows in recent months have diminished but remain in positive territory, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

“M/T [municipal-to-Treasury] ratios have ticked up above 100%,” he said in a note Monday.

“State and local government credit conditions are generally improving, although outliers such as Chicago and New Jersey as well as Puerto Rico are concerns. We would expect ratios to recede back below the 100% line in coming months, but negative credit events [like Chicago, New Jersey and Puerto Rico] could cloud the picture, reverse flows and push M/T ratios yet higher. Stay tuned.”

PANYNJ deal set

Looking to that large calendar of upcoming deals, the new-issue action get off to a big start on Tuesday when the Port Authority of New York and New Jersey will price $775 million of consolidated bonds in two tranches.

The deal includes $125 million of series 188 bonds due 2015 to 2025 and $650 million of series 189 bonds due 2016 to 2035 with term bonds due in 2040 and 2045.

The bonds (Aa3/AA-/AA-) will be sold through BofA Merrill Lynch.

Proceeds will finance capital projects for the authority.

NYC Transition preps sale

Another major New York offering is on tap for Wednesday. The New York City Transitional Finance Authority will hit the market with $850 million of future tax secured subordinated bonds through joint bookrunners Loop Capital Markets LLC, Barclays, BofA Merrill Lynch, Goldman Sachs & Co., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC.

That deal includes $650 million of series 2015E-1 tax-exempt bonds due 2017 to 2042 and $200 million of series 2015E-2 taxable bonds due 2020 to 2029.

Proceeds will be used to finance general city capital expenditures.

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