Municipals round out session flat amid light trading; about $5 billion of new deals ahead

By Sheri Kasprzak

New York, Aug. 16 - Municipal yields were largely unchanged on Friday following a light trading session, market insiders reported. Municipals struggled early in the session along with Treasuries, which ended weaker yet again.

"We seem to be leveling off early declines," said a trader in the afternoon.

"We're outperforming Treasuries, but considering the fact that Treasuries are tanking and we're not moved by much isn't saying a lot."

Looking ahead, about $5 billion of new issues are slated to come to market, including a substantial offering from the Dormitory Authority of the State of New York for the State University of New York. The authority will sell $526.68 million of series 2013A revenue bonds (Aa3/A+/A+) through BofA Merrill Lynch and Siebert Brandford Shank & Co. LLC.

Proceeds will be used to finance one year of the university's capital program to construct and renovate dormitory facilities.

High-grade municipals down

Looking to index data, investment-grade municipals were down for July, according to a report released Friday by J.R. Rieger, vice president of fixed income indices with Standard & Poor's Dow Jones Indices.

"Investment-grade municipals tracked in the S&P National AMT-Free Municipal Bond Index are down 1% for the month and 4.9% year to date," said Rieger.

"Since July 26, the yield to worst of this index has increased steadily by 13 basis points to its present level of 3.67%."

Elsewhere, shorter municipals were down slightly for the month as well.

"Shorter municipal bonds tracked in the S&P Short-Term National AMT-Free Municipal Bond Index are up 0.27% year to date yet down slightly (-0.03%) for the month as investors move into shorter maturities to protect themselves against rising interest rates," said Rieger.

By comparison, the S&P Intermediate Term National AMT-Free Municipal Bond index and the S&P Long-Term National AMT-Free Municipal Bond index are down 0.62% and 1.97%, respectively, Rieger noted.

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