Municipal yields cheapen again amid light trading action; New York's MTA to bring $500 million

By Sheri Kasprzak

New York, May 28 - With little activity to move the market, municipals sold off along with Treasuries on Tuesday, market sources said.

Yields were off by as much as 4 basis points, market sources said in the afternoon, with the concentration of weakness seen in longer maturities. Treasuries were off substantially, with the 10-year and 30-year yields seen up 16 bps.

"There's really not enough going on to move us, but we're flowing along with Treasuries, and Treasuries are getting smacked around today," a trader said.

Primary action this week will be slightly more subdued given the fact that Memorial Day shortened the week, but about $5 billion of new deals are still expected to hit the market.

Tax-free yields up 8 to 9 bps

Week-over-week, tax-exempt yields jumped as much as 9 bps, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"Tax-free yields finished last week notably higher with the 10-year MMD benchmark rising 8 basis points over the prior week's close to 1.9% and the 30-year finishing up 9 bps at 3.08%," Schankel wrote Tuesday.

Meanwhile, inflows continue to be mixed but mostly positive, said Schankel. Inflows are running at about a third of 2012's pace, he noted.

"Lipper, which offers more timely but less comprehensive data on flows than ICI, reported that only $62 million of new money flowed to funds in the week ending May 22," he wrote.

"This slackening demand will be offset by strong summer reinvestment flows, which kick in beginning next week with about $34 billion available in June from maturing bonds and pre-refunding redemptions, compared to only $17 billion in May. June and July will also see strong reinvestment demand."

MTA offering set

Looking to the week's new-issue calendar, the Metropolitan Transportation Authority of New York will lead new offerings with its $500 million sale of series 2013C transportation revenue bonds.

J.P. Morgan Securities LLC and Loop Capital Markets LLC are the senior managers for the deal.

The authority intends to use the proceeds from the offering to finance transit and commuter projects. Pricing is slated for Wednesday.

Also on Wednesday, the City of Columbus, Ohio, plans to sell $368.7 million of series 2013 various purpose unlimited tax general obligation refunding bonds (Aaa/AAA/AAA) through BofA Merrill Lynch.

The bonds will be offered in two tranches.

Proceeds will be used to refund the city's series 2009C, 2010C, 2010-2C and 2010-3A various purpose unlimited tax Build America Bonds, its series 2009E various purpose unlimited tax recovery zone economic development bonds and its series 2009D, 2010D and 2010-3B various purpose limited tax Build America Bonds.

© 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.