Municipals end week firmer; Sutter Health gears up for $900 million sale of revenue bonds

By Sheri Kasprzak

New York, Jan. 21 - Municipal yields ended another roller coaster week on a firmer note, as muni investors returned to the marketplace and the noise over anticipated widespread bankruptcies died down, market insiders reported.

"We're better by maybe 3 to 5 basis points out long, and the shorter maturities are mostly flat," said one trader reached during the session.

"It's been a typical Friday, but there is a firmer tone. Trading was quiet."

Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC, said Friday that investors are being encouraged by the slowing of mutual funds selling off munis.

"Debate ... heightened at the end of the year when former banking analyst turned owner of an independent research firm Meredith Whitney predicted excessive municipal defaults, creating the mistaken impression that drastic and immediate measures are needed to avoid a municipal market meltdown," Kozlik said.

"A report released yesterday from the Center on Budget and Policy Priorities indicates that while there is no immediate threat, there are longer-term issues relating to debt, pension obligations and health-care costs that do need to be addressed to minimize long-term costs."

Kozlik noted that bargain-hunting investors have been flocking back to municipals and that primary market issuance is manageable, which may have assuaged buyers' fears that there could be limited supply in the short term.

Sutter Health sale ahead

Headlining primary action in the week ahead is a $900 million offering from Sutter Health, which will be sold in two parts. The offering includes $325 million of series 2011A bonds from the California Statewide Communities Development Authority and $575 million of series 2011B bonds from the California Health Facilities Financing Authority.

The bonds (//AA-) will be sold through Morgan Stanley & Co. Inc.

Proceeds will be used to finance the health-care system's ongoing capital plan and refund existing debt.

Sutter Health is based in Sacramento.

PANYNJ bonds to price

Coming up on Thursday, the Port Authority of New York and New Jersey is slated to price $300 million of 166th series consolidated bonds competitively.

The bonds are due 2030 to 2041.

The authority intends to use the proceeds to fund capital projects and refund existing debt.

University of Minnesota deal planned

Out on the horizon, the University of Minnesota is expected to come to market with $338.555 million of series 2011A general obligation bonds, said a preliminary official statement.

The bonds will be sold through Barclays Capital Inc.

Proceeds will be used to purchase and improve land and buildings, construct and equip campus facilities and make other campus improvements.

The university is based in Minneapolis and St. Paul.

© 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.