Municipal yields end week firmer as Treasuries improve; Montgomery County, Md., sets offering

By Sheri Kasprzak

New York, July 29 - Municipals closed out a rough week on a positive note. Yields were seen lower by 2 basis points to 3 bps across the curve, said traders. The firming was largely due to an improved Treasuries market as investors sought out safety in a growingly volatile economic climate.

"Investors are still skittish," said one trader.

"But we are seeing highly rated bonds getting some attention. There seems to be a flight to quality. Treasuries are benefitting somewhat from weaker stocks."

On a broader note, Alan Schankel, managing director with Janney Montgomery Scott LLC, said Friday that the yield curve continues to steepen with a one- to 10-year yield differential of 250 bps and a 417 bps one- to 30-year spread.

"ICI mutual fund flow statistics indicate that investors added $226 million to municipal funds in the week ending July 20, but overall flows, including equity and taxable bond funds, saw $4.6 billion of outflows, the largest mutual fund exodus thus far in 2011," Schankel wrote.

Montgomery County plans deal

Looking to the coming week's primary action, Montgomery County in Maryland is scheduled to bring $579.41 million of series 2011 consolidated public improvement general obligation bonds (Aaa/AAA/AAA) competitively on Wednesday.

The bonds will be sold in two tranches. The 2011A bonds are due 2012 to 2031, and the 2011B bonds are due 2012 to 2033.

Proceeds will be used to refinance all or a portion of the county's outstanding bond anticipation notes and to refund existing G.O. debt.

New York Transitional ahead

Also in the coming week, the New York City Transitional Finance Authority plans to price $300 million of series 2012A future tax secured subordinated bonds, said a preliminary official statement. Pricing is slated for Wednesday.

The bonds will be sold through senior manager J.P. Morgan Securities LLC.

Proceeds will be used to redeem existing bonds.

Lee County to fly sale

Coming up on Tuesday, Lee County in Florida is scheduled to bring $118.9 million of series 2011A airport revenue refunding bonds through Citigroup Global Markets Inc.

The bonds are due 2013 to 2026 with a term bond due in 2029.

Proceeds will be used to refund all or a portion of the county's outstanding series 2000A airport revenue bonds.

Sacramento sanitation deal set

Also ahead, the Sacramento County Sanitation Districts Financing Authority out of California is prepared to sell $78.02 million of series 2011A revenue refunding bonds (Aa3/AA/AA-), said a preliminary official statement.

The bonds will be sold through Stone & Youngberg and are due 2022 to 2027.

Proceeds will be used to redeem the authority's series 2001 revenue bonds on Aug. 26, 2011.

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