Municipals weaken along with Treasuries; week's new-issue calendar expected to be $5 billion

By Sheri Kasprzak

New York, Nov. 8 - Municipals closed out the session much weaker following along with a sinking Treasuries market, insiders reported.

Yields were off by as much as 10 basis points after the release of nonfarm payroll numbers from the Bureau of Labor Statistics.

The 10-year Treasury note yield jumped by 14.5 bps to end at 2.75%, the highest close in weeks. The seven-year note was up 15 bps at 2.126%, and the 30-year bond yield was up 14 bps at 3.846%.

Meanwhile, outflows continued in the week ended Wednesday. Lipper Inc. reported $738 million of net redemptions, compared with $503 million the previous week.

"As we near year-end, it's notable that although fund outflows have totaled more than $40 billion in 2013, much of that selling pressure has been alleviated by lighter new issue supply, which through October is $43 billion behind last year's pace," said Alan Schankel, managing director with Janney Montgomery Scott LLC.

California deal ahead

Looking to the week's new issues, there are about $5 billion of new deals expected, with the California State Public Works Board expected to bring $625 million of series 2013I lease revenue bonds (A2/A-/A-).

The bonds will be sold through RBC Capital Markets LLC and Goldman Sachs & Co.

Proceeds will be used to finance a new animal health and food safety laboratory and the construction of a new courthouse in San Diego.

Jefferson warrants planned

On Nov. 5, Jefferson County, Ala., announced its plans to price $1,738,408,714.95 of series 2013 sewer revenue warrants.

The offering will be conducted though Citigroup Global Markets Inc.

The deal includes $375 million of series 2013A senior lien sewer revenue current interest warrants, $55,693,095.85 of series 2013B senior lien sewer revenue capital appreciation warrants, $69,308,272.15 of series 2013C senior lien sewer revenue convertible capital appreciation warrants, $750,155,000 of series 2013D subordinate lien sewer revenue current interest warrants, $71,935,073.95 of series 2013E subordinate lien sewer revenue capital appreciation warrants and $416,317,273 of series 2013F subordinate lien sewer revenue convertible capital appreciation warrants.

Proceeds will be used to refund and retire existing sewer revenue bonds and to pay past-due debt service on those refunded bonds.

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