Short-term municipal yields rise amid secondary pressure; half of week's slate is day-to-day

By Sheri Kasprzak

New York, July 8 - Municipals hit a snag on Monday amid some secondary selling pressure, market insiders reported.

Despite a rally for Treasuries, municipals, particularly inside of 10 years, couldn't catch a break, climbing 3 basis points to 5 bps. The rest of the market remained in a holding pattern, said traders.

"There's definitely some pressure on the secondary side, and there's still a pretty big new-issue calendar, so that's adding some pressure," a trader said.

Bids-wanted continued to dominate activity with mutual funds seeking cash for redemptions, said a market insider.

Despite the fact that the calendar includes about $6.4 billion of new deals, about $3.6 billion of those issues are day-to-day, said Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC.

St. Joseph deal ahead

Looking to upcoming deals, the California Health Facilities Financing Authority is expected to finally come to market with $763.67 million of series 2013 revenue bonds for St. Joseph Health System during the week.

The bonds (A1/AA-/AA-) will be offered through senior manager Morgan Stanley & Co. LLC.

The offering had been on the calendar a few weeks ago, but due to market conditions, it was pulled.

Proceeds from the sale will be used to construct, equip, acquire, renovate and remodel the Hoag Hospital Newport Beach, St. Joseph Hospital, St. Jude Medical Center, St. Mary Medical Center and Santa Rosa Memorial Hospital.

New York Environmental to sell

Also coming up, the New York State Environmental Facilities Corp. is in the market again, this time with a $164.31 million offering of series 2013B state revolving funds revenue bonds (Aaa/AAA/AAA).

The corporation hit the market last week with $401.9 million of series 2013A state clean and drinking water funds revenue bonds through Citigroup Global Markets Inc. and M.R. Beal & Co.

Those bonds (Aaa/AAA/AA+) are due 2014 to 2033 with 3% to 5% coupons and 0.18% to 4.46% yields.

The upcoming bonds are due 2014 to 2043.

Proceeds from the sale will be used to finance or refinance drinking or clean water projects within the state and to refund existing debt.

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