Municipals end week flat amid light trading; Missouri Highways plans new bond offering

By Sheri Kasprzak

New York, May 16 - The municipals market was largely unchanged on Friday amid light primary action, market insiders said.

Despite rallying throughout the week along with Treasuries, activity slowed to a halt on Friday, with little to move muni yields, said a trader.

Looking to the week ahead, new issue volume will once again not top $5 billion.

In other muni news, Lipper reported positive flows to municipal mutual funds, with net inflows of $562 million for the week.

Municipals did outperform Treasuries at the end of the week, despite following closely early on. Despite posting a 10 basis point drop on the week, the 10-year note yield rose by 2 bps to close the day at 2.521%. Elsewhere, the five-year note yield rose by 1.5 bps to 1.552%, and the 30-year bond yield rose by half a basis point to 3.343%.

This turnaround in the market was sparked by a positive housing market report. Privately owned housing starts in April climbed by 13.2%, compared with the 947,000 March estimate.

Missouri, Connecticut have deals

Leading the new crop of deals in the week ahead, the Missouri Highways and Transportation Commission will offer $894.45 million of series 2014 refunding state road bonds in two tranches. Pricing is slated for Tuesday.

The bonds will be sold through senior manager BofA Merrill Lynch.

The offering includes $581.98 million of series 2014A first-lien bonds (Aaa/AAA/AAA), which are due 2017 to 2026, and $312.47 million of series 2014B second-lien bonds (Aa1/AAA/AA+), which are due 2018 to 2025.

Proceeds will be used to refund the commission's series 2006 bonds.

Connecticut organizes sale

In other primary action, the State of Connecticut will head to market Tuesday with $650 million of series 2014C general obligation refunding bonds through Morgan Stanley & Co. LLC.

The bonds are due 2014 to 2025.

Proceeds from the offering will be used to refund the state's series 2004B and 2005C-D G.O. bonds.

Cuyahoga deal ahead

Also coming up during the week, Cuyahoga County, Ohio, will offer certificates of participation (Aa3/AA-/) to finance a convention center in downtown Cleveland that is already under construction.

The $230,885,000 of COPs will be sold through Stifel, Nicolaus & Co. Inc.

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