Municipal yields follow Treasuries lower yet again; Hospital Sisters sells $145.67 million

By Sheri Kasprzak

New York, Sept. 12 - Municipal yields were softer yet again on Wednesday following along with weaker Treasuries ahead of the Federal Open Market Committee's highly anticipated meeting on Thursday.

Additionally, some wider bid/ask spreads led to cheaper rates, traders reported.

"Secondary has left something to be desired today," one trader said in the afternoon.

"This morning, we were getting a lot of wider bid/asks. Trading activity in general is better than it has been all week, but the tone overall is weaker."

The tone, in fact, followed Tuesday's, with munis following along with Treasuries.

On Tuesday, the AAA MMD benchmark hit 1.81% in 10 years and 2.94% in 30 years, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

The light new-issue calendar has limited market activity, Schankel noted. Even though only $2 billion in new issues is expected in the week ahead, Janney expects additions with the pace increasing into the fall months.

Harrisburg to miss payment

Heading to bankruptcy news, the City of Harrisburg, Pa., is expected to skip a Sept. 15 debt service payment, a $3.4 million maturity on general obligation zero-coupon bonds, Schankel said.

"Since the bonds are Ambac-insured, payment is expected to be made by the insurer, as was the case when the March payment was skipped," said Schankel.

"The receiver is in the process of implementing a recovery plan involving sales and lease of city assets including a troubled incinerator plant and the city's parking system. The clock is ticking as a state law prohibiting bankruptcy filing expires on Nov. 30."

Hospital Sisters tops primary

In light primary action Wednesday, the Hospital Sisters Services Inc. came to market with $145,665,000 of series 2012 revenue and refunding bonds through the Wisconsin Health and Educational Facilities Authority and the Illinois Finance Authority.

The deal included $76.88 million of series 2012B Wisconsin HEFA revenue refunding bonds and $68,785,000 of series 2012C Illinois Finance revenue bonds.

The 2012B bonds are due 2013 to 2021 with 2% to 5% coupons. The 2012C bonds are due 2013 to 2021 with 2% to 5% coupons.

The bonds (/AA-/AA-) were sold through Bank of America Merrill Lynch.

Proceeds will be used to construct, equip, acquire and renovate health care facilities in Illinois, as well as to refund existing bonds issued by the Wisconsin authority.

Competitive deals dominate

Meanwhile, Thursday's offerings will be dominated by competitive deals.

The Arapahoe County Water and Wastewater Public Improvement District of Colorado plans to sell $59,055,000 of series 2012 G.O. refunding bonds (/AA-/) competitively.

The bonds, which are due 2013 to 2032, will be used to refund the district's series 2002A G.O. bonds.

The State of Illinois will also competitively sell $50 million of series of September 2012 G.O. bonds (A2/A/).

Those bonds are due 2013 to 2022 and will be used to finance the state's information technology capital projects.

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