Municipals trade lower in tandem with Treasuries on job growth; supply to remain light

By Cristal Cody

Prospect News, Feb. 3 - Municipal bonds ended Friday weaker across the intermediate to long end of the curve as Treasuries traded lower on better job data.

"Municipals are about 10 bps weaker, mostly due to Treasuries," a municipal bond source said. "There's already resistance building to prices at recent levels so this just facilitated already a correction coming to shift."

The 10-year Treasury note yield climbed 10 basis points to 1.92%. The 30-year bond yield traded as much as 15 bps higher before ending the day up 12 bps to 3.12%.

The Labor Department said 243,000 jobs were added in January, far higher than the 145,000 forecast. The unemployment rate fell to 8.3% from 8.5%.

"Everything is pretty much trading off of the unemployment number and expectations that this is a sign the economy is rebounding," a bond source said. "Most of the components were good, except the employment-to-population ratio and the year-over-year hourly earnings, which is still running below the inflation rate."

The market is anticipating comments on the state of the economy on Tuesday from Federal Reserve Chairman Ben S. Bernanke before the Senate Budget Committee.

"Following the data we got today, it will be interesting to hear what he has to say," a source said.

Municipal bond supply is expected to stay light with a handful deals on the calendar for the week ahead.

Cleveland plans airport bonds

One new offering in the works was announced by City of Cleveland, Ohio, which plans to sell $240,605,000 of series 2012A airport system revenue bonds, according to a preliminary official statement.

Morgan Stanley & Co. LLC and J.P. Morgan Securities Inc. are the bookrunners. Co-managers are Estrada Hinojosa & Co. Inc.; Janney Montgomery Scott LLC; Rice Financial Products Co.; Sterne Agee Group, Inc.; Stifel Nicolaus & Co., Inc. and Wells Fargo Securities LLC.

Proceeds will be used to refund the outstanding series 2000A airport system revenue bonds.

Rockefeller University's deal

The Dormitory Authority of the State of New York also announced plans to offer $80,265,000 of revenue bonds (Aa1/AA+/) for the Rockefeller University, according to a preliminary official statement on Friday.

The deal includes $27,145,000 of series 2012A bonds and $53,120,000 of series 2012B bonds.

J.P. Morgan Securities Inc. is the lead manager. Co-managers are Goldman, Sachs & Co. and US Bancorp Investments, Inc.

Proceeds will be used to refund all or a portion of the outstanding series 1998 Rockefeller University revenue bonds.

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