Municipal yields close firmer as the week closes; New Jersey to sell $2.6 billion TRANs

By Sheri Kasprzak

New York, Oct. 26 - Municipal yields were improved Friday over the prior day's results, with some firmness coming back into the market, traders reported.

"Yields are better by a basis point or two in spots," said one trader.

Meanwhile, supply is expected to taper somewhat in the coming week, with $5.5 billion in new issues expected to come to market.

"[Municipal/Treasury] ratios are below 100% in most maturities," said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"For example, the 10-year MMA AAA benchmark yield finished at 1.78%, 2 bps higher, while the like maturity Treasury yield was 3 bps higher at 1.82%, for a ratio of 97.6%. The strong demand/moderate supply balance continues."

Mutual funds add $1.3 billion

Mutual funds added an additional $1.3 billion in the week ending Oct. 17, said Schankel.

"To give some perspective to positive municipal flows, in the past 13 weeks munis have added $15.5 billion, and bond funds overall, including taxable funds, are $96 billion fatter, while equity mutual funds lost $61 billion. The supply part of the balance remains manageable, with about $5.5 billion in new issues slated for the next week."

Elsewhere, a trader reported Friday that issuers are taking out more short-term debt, reducing investible supply on the short end.

New Jersey to sell TRANs

Speaking of short-term debt, the State of New Jersey is scheduled to sell $2.6 billion of series 2013 tax and revenue anticipation notes.

The notes will be sold competitively and are due June 27, 2013.

Proceeds from the offering will be used to finance revenues and expenditures for the state's general fund ahead of the collection of taxes and revenues during the 2013 fiscal year.

Wake Forest debt priced

In primary action, the North Carolina Medical Care Commission sold $231.01 million of series 2012 health care facilities revenue and refunding bonds for the Wake Forest Baptist Obligated Group, according to a pricing sheet.

The deal included $118,405,000 of series 2012A revenue bonds and $112,605,000 of series 2012B refunding revenue bonds.

The bonds (Aa3/AA-/) were sold through Morgan Stanley & Co. LLC and Goldman Sachs & Co.

The 2012A bonds are due in 2045. The bonds have a split maturity with a 4% coupon priced at 100.657 and a 5% coupon 112.79.

The 2012B bonds are due 2013 to 2027 with a term bond due in 2033. The serial coupons range from 2% to 5%. The 2033 bonds have a 4% coupon priced at 104.116 and a 5% coupon priced at 115.356.

Proceeds will be used to finance capital improvements to Wake Forest facilities and refund debt.

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