Munis open after holiday little changed; $9 billion of new issues ahead, led by Dasny deal

By Sheri Kasprzak

New York, Oct. 9 - The municipals market cranked back up after the Columbus Day holiday, but there was little activity on Tuesday to move the market in any direction despite firmer Treasuries, traders reported.

Early in the session, the market was a bit weaker, said a trader reached in the early afternoon, but strong bids in secondary helped level out the tone by the end of the session.

"Trading was pretty light in the morning, and we're seeing some stuff being cut [in secondary]," the trader said.

"We really expect the market to turn around as the week progresses and more new issues price."

Supply certainly won't be an issue for the week ahead. Despite the fact that the week was shortened by the Columbus Day holiday, nearly $9 billion of new offerings are expected to hit the market this week, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"Unlike Treasuries, which finished last week with yields well higher on the week, muni yields were relatively resilient, allowing muni-to-Treasury ratios to close below 100% in most maturities for the first time since May," Schankel wrote Tuesday.

Dasny leads new deals

The new crop of offerings will be led by an $877,195,000 offering from the Dormitory Authority of the State of New York. The authority will sell state personal income tax revenue bonds (/AAA/AA) through Bank of America Merrill Lynch, J.P. Morgan Securities LLC and Siebert Brandford Shank & Co. LLC.

The authority intends to use the proceeds to finance capital projects for the State University of New York.

Moody's has negative outlook

Moody's Investors Service maintained its negative outlook for most of the municipal market sectors in its midyear review. The exception was the higher education sector, which has a stable outlook.

"The negative outlook for the state sector is based primarily on both the impact of federal budget cuts and the uncertainty related to the looming sequestration," Schankel wrote.

"Local government faces flow-down pressures from reduced state support and depressed property tax revenues. Nonprofit health care faces headwinds from both declining reimbursements from federal programs, namely Medicare and Medicaid, as well as uncertainty related to the shifting ground underlying the myriad of changes ahead as the Affordable Care Act continues its multiyear rollout."

Milwaukee sells RANs

Tuesday's new issues were led by the City of Milwaukee's $120 million sale of series 2012 M11 school revenue anticipation notes.

The notes (MIG 1/SP-1+/) were sold competitively.

The notes are due June 26, 2013, have a 1.5% coupon and priced at 100.875.

Proceeds will be used to finance Milwaukee Public Schools operations on an interim basis pending the receipt of state aid payments.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.