Municipals end mixed after wild week; California finance director Ana Matosantos to step down

By Sheri Kasprzak

New York, June 28 - Municipals were mixed on Friday after a rollercoaster of a week, with yields moving just a bit in either direction across the curve due mostly to some weakness in Treasuries, traders said.

The week was a wild one, and the positive movement seen in the past couple of sessions might just be enough for municipal indexes to recover some losses for the month.

Investment-grade municipals, as tracked by the S&P National AMT-Free Municipal Bond index, reportedly recovered some of their June losses already, rebounding 1.84% from a negative 4.97% low on June 24. Even so, the index has recorded a 3.13% loss for the month to date, said J.R. Rieger, vice president of fixed income indexes with S&P Dow Jones Indices.

Ten-year callable bonds, as tracked by the S&P AMT-Free Muni Series 2023 index, began June at a 2.64% yield, peaked at 3.46% on June 24 and recovered 36 basis points to end the month at 3.1%, Rieger reported Friday.

High-yield munis dive

Meanwhile, the S&P Municipal Bond High Yield index gave up 4.87% in June to date as its yield to worst rose 79 bps for the month, said Rieger.

"Tobacco bonds have been a drag on performance as these long-duration bonds have returned a negative 7.26% month-to-date as tracked by the S&P Municipal Bond Tobacco index," Rieger wrote.

During the week, in fact, the Tobacco Settlement Financing Corp. of Louisiana's $638.03 million offering of series 2013A tobacco settlement asset-backed refunding bonds was delayed due to market conditions.

Citigroup Global Markets Inc. and Jefferies & Co. are the lead managers for the deal, the proceeds of which will be used to refund all outstanding series 2001B asset-backed tobacco settlement bonds.

Matosantos to step down

In personnel news, the State of California's director of finance, Ana Matosantos, will step down from her position in September.

"As the state has dug itself out of the deepest of fiscal holes, no one has done more shoveling than Ana," California treasurer Bill Lockyer said in a statement.

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