Municipals end mostly unchanged ahead of smaller calendar; S&P, Moody’s cut Puerto Rico debt

By Sheri Kasprzak

New York, June 27 – Municipals rounded out Friday mostly flat as the market prepared for a much-quieter, holiday-shortened week, market sources reported.

Yields were flat across the curve. The week ahead will feature just about $3 billion of new offerings ahead of the July 4 holiday, compared with a $9 billion new-issue calendar during the week just completed.

Amid the increased supply, munis ended the week on a strong note, with the 30-year MMA benchmark finishing at 3.44%, the lowest level of the month, a market source reported.

Additionally, muni mutual funds saw $233 million of inflows during the week ended Wednesday.

Alabama school deal set

Amid the larger offerings of the short week, the Alabama Public School and College Authority is scheduled to price $554.52 million of series 2014B capital improvement refunding bonds on Tuesday.

The bonds will be sold competitively and are due 2019 to 2027.

Proceeds will be used to refund the authority’s series 2007 capital improvement bonds.

More Puerto Rico downgrades

Moving to ratings news, more Puerto Rico debt got downgraded following Gov. Alejandro Garcia Padilla’s proposed legislature that would allow public corporations, like its electric power authority and others, to restructure debt through a process of negotiation with creditors or under the Puerto Rico court system.

Government G.O. bonds, Government Development Bank bonds and Puerto Rico Sales Tax Corp. bonds would be exempt from this restructuring plan.

On Friday, Moody’s Investors Service announced that it downgraded Puerto Rico Aqueduct and Sewer Authority bonds to Ba3 and Puerto Rico Highway & Transportation Authority debt to Ba3. Standard & Poor’s dropped Puerto Rico Electric Power Authority to BB.

Puerto Rico Electric Power Authority yields have risen over the past two session, said a market insider, with trades of 5.25% bonds due 2040s seeing yields as high as 11.64%, compared with 9.46% last week.

© 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.