Municipals better 10 years and out in spite of Treasuries slump; Grand Parkway offers up notes

By Sheri Kasprzak

New York, Feb. 4 - Municipals started out the session on a positive note Tuesday, and that momentum remained throughout the day beyond 10 years despite a slump in Treasuries, market sources said.

"Outside of 10 years, there's a much firmer tone, maybe 2 to 3 basis points [better]," a trader said in the afternoon.

"Trading is pretty strong, and supply is not that heavy, so there's not a lot of pressure. The secondary pressure from last week seems to have been alleviated."

Treasuries hit a snag after the release of factory orders data from the Commerce Department. After the data indicated overall factory orders declined by 1.5%, less than the anticipated 2%, the 30-year bond yield rose by 5.5 bps to close at 3.594%, and the 10-year note yield climbed by 4 bps to 2.624%. The five-year note yield rose by 2.5 bps to 1.461%.

Grand Parkway notes price

Heading up the day's primary action, the Grand Parkway Transportation Corp. of Texas sold $733,465,000 of series 2014A subordinate tier toll revenue refunding bond anticipation notes.

The notes (/SP-1+/) were sold through lead manager Goldman Sachs & Co.

The notes are due Dec. 15, 2016, have a 3% coupon and priced at 106.599, said a pricing sheet.

Proceeds will be used to refund a portion of the corporation's series 2013C bonds.

S&P cuts Puerto Rico G.O.s

Moving to ratings news, Standard & Poor's dropped the Commonwealth of Puerto Rico's general obligation note rating to BB+ from BBB-.

Also, S&P announced Tuesday that it downgraded the commonwealth's employee retirement system to BB.

"The downgrades follow our evaluation of liquidity for the commonwealth, including what we believe is a reduced capacity to access liquidity from the Government Development Bank of Puerto Rico," said the report from analysts David Hitchcock and Horacio Aldrete-Sanchez.

"In related action, we downgraded the GDB to BB, and the rating remains on CreditWatch with negative implications. We also believe the commonwealth's access to liquidity either through GDB or other means will remain constrained in the medium term, even in the event of a potential issuance of debt planned next month. We believe these liquidity constraints do not warrant an investment-grade rating."

© 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.