Municipals end session softer ahead of New York bond offering; $4.5 billion new issues ahead

By Sheri Kasprzak

New York, May 20 - Municipals closed Monday a touch softer, market sources said, as a retail order period was conducted for the City of New York's planned $950 million sale of general obligation bonds.

"We're a bit off today," a trader said in the early afternoon.

"Not a great deal, but there's a softer tone overall."

Meanwhile, yields on New York's G.O. bonds could be dropped during institutional pricing, said market sources.

"It's looking like yields will be cut," said a source reached Monday.

New York G.O. bonds ahead

The city plans to hit the market with $950 million of series 2013 G.O. bonds (Aa2//AA) on Tuesday.

The offering includes $230 million of series 2013I G.O. bonds and $720 million of series 2013J G.O. bonds.

BofA Merrill Lynch is the senior manager for the deal, the proceeds of which will be used to refund outstanding G.O. bonds for a debt service savings and to fix out a portion of the city's outstanding variable-rate demand bonds.

$4.5 billion of new deals set

Looking to the week's action, about $4.5 billion of new deals are coming up, said Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC.

In the broader market, the 10-year AAA Municipal Market Data yield rose slightly, ending last week at 1.82%, and the 30-year MMD yield closed out last week up 4 basis points to end at 2.97%.

After two weeks of positive flows, Kozlik said the market experienced $263 million of outflows during the week ended May 8.

"Last time there was an outflow was in the week of April 17 when the market saw $696 million of outflows," Kozlik wrote.

L.A. water deal coming

Also ahead this week, the Los Angeles Department of Water and Power plans to sell $480 million of series 2013 power system revenue bonds, said a pricing sheet.

The offering includes $452,145,000 of series 2013B bonds and $27,855,000 of series 2013C bonds.

The bonds (Aa3/AA-/AA-) will be sold on a negotiated basis. Goldman Sachs & Co. is the senior manager for the 2013B bonds and the sole underwriter for the 2013C bonds.

Proceeds will be used to finance capital improvements included in the department's integrated resource plan.

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