Municipal yields trade 10 bps better on rally in Treasuries after weaker job report

By Cristal Cody

Tupelo, Miss., April 5 - Municipal bonds rallied on Friday with yields improved by 10 basis points across the board as Treasuries climbed on disappointing job data from the Labor Department, market sources said.

"Things are really trading up and things are going away," a trader said. "There's not a whole lot of crazy trading going on, but people are marking stuff up and it's got a very good tone to it. Munis are still underperforming Treasuries and I think that's the key going forward."

The muni rally was due the "return of the bid for Treasuries," said Matt Fabian, managing director of Municipal Market Advisors. "In general, investors are comfortable at current prices, so I don't think the market needs to rise or fall and probably will continue to take its cue from Treasuries."

The Labor Department reported an increase of 88,000 jobs in March, lower than the forecast of an additional 195,000 jobs.

Several new municipal bond offerings were announced for April and new deals are expected for the coming week, including from California, Michigan, Wake County, N.C. and Washington Suburban Sanitary District according to market sources.

California to sell $2 billion

Coming up on Thursday, the State of California plans to sell $2 billion of various purpose general obligation and refunding bonds (A1/A/A-), according to the state treasurer's office.

The sale includes $1.25 billion of new money bonds and $750 million of refunding bonds.

BofA Merrill Lynch and Morgan Stanley are the senior managers of the negotiated sale. Southwest Securities, Inc. is co-senior manager.

Proceeds will be used to fund projects and pay outstanding general obligation commercial paper notes and general obligation bonds.

Triborough to sell bonds

The Triborough Bridge and Tunnel Authority, New York, announced plans to sell $200 million of series 2013C general revenue bonds (Aa3/AA-/AA-), according to a preliminary official statement.

Ramirez & Co., Inc. and Duncan-Williams, Inc. are the senior managers of the negotiated sale.

Proceeds will be used to finance bridge and tunnel projects.

Muskinghum County plans deal

The County of Muskinghum, Ohio expects to be in the market with an offering of $294.94 million of hospital facilities revenue bonds (expected Ba1/BB+/) for Genesis Healthcare System, according to a preliminary official statement.

The series 2013 bonds have terms due 2018, 2023, 2033, 2043 and 2048.

Barclays is the senior manager of the negotiated sale.

Proceeds will be used to finance the acquisition, construction, renovation, equipping and installation of health care facilities and to refund and retire certain outstanding taxable debt.

Novant Health to sell bonds

Novant Health, Inc. of North Carolina plans to raise $286.1 million through an offering of bonds (A1/A+/AA-) that will be issued by the North Carolina Medical Care Commission and the Industrial Development Authority of the County of Prince William, according to a preliminary official statement.

The North Carolina Medical Care Commission will sell $146.68 million of series 2013A revenue and revenue refunding bonds.

The Industrial Development Authority of the County of Prince William will offer $139.42 million of series 2013B revenue and revenue refunding bonds.

Both tranches have serial maturities from Nov. 1, 2013 through Nov. 1, 2020 and terms due 2033, 2038, 2043 and 2046.

J.P. Morgan Securities Inc. is the senior manager of the negotiated sale.

Proceeds will be used to finance the cost of additional health care facilities, refund certain bonds and refinance debt.

Novant to also bring taxable bonds

In another offering, Novant Health also intends to sell $250 million of series 2013C taxable bonds due 2043 (A1/A+/AA-), according to a preliminary official statement.

J.P. Morgan Securities Inc. is the senior manager of the negotiated sale.

Proceeds will be used for corporate purposes, including to refinance long-term debt.

Multnomah schools plans deal

Also on tap for later in the month, the Multnomah County School District No. 1 in Portland, Ore., intends to price $148.74 million of general obligation bonds (Aa1//) competitively on April 17, according to a preliminary official statement.

The sale includes $79,545,000 of series 2013A bonds due 2014 to 2015 and $69,195,000 of series 2013B bonds with serial maturities from 2014 through 2033.

Seattle-Northwest Securities Corp. is the financial advisor.

Proceeds will be used to finance the costs of capital projects in the district.

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