Municipals sink after GDP decline reported; $6 billion of new offerings set for week ahead

By Sheri Kasprzak

New York, May 30 - Municipals declined Friday after Treasuries slipped, market insiders said. Low supply and light secondary market action kept yields unmoved for most of the session, but Treasuries slipped over fears that a decline in Gross Domestic Product could keep the federal funds rate low.

Yields on tax-exempt triple-A municipals were higher by 1 basis point to 2 bps across the curve, said a trader during the afternoon.

Meanwhile, the 10-year Treasury note yield rose by 3 bps to close the day at 2.475%, the five-year note yield climbed by 3 bps to 1.541%, and the 30-year bond yield rose by 2.5 bps to 3.326%.

Meanwhile, municipal mutual fund flows were positive, with $554 million added in the week ended May 28.

Looking to the week ahead, the new-issue calendar is expected to include about $6 billion of new offerings, relatively high compared to the recently low supply.

Chicago Midway trades

Moving to secondary market action, the Chicago Midway Airport's series 2014A AMT bonds and the Massachusetts Water Pollution Abatement Trust's series 2014 state revolving fund refunding bonds were seen trading 2 bps to 6 bps firmer during the session Friday, said a trader.

The Chicago bonds were offered as part of a $769.6 million sale of revenue and refunding bonds on Thursday. The 2014A AMT bonds are due 2021 to 2034 with a term bond due in 2041. The serial bonds have 5% coupons. The 2041 bonds have a 5% coupon and priced at 104.319.

Massachusetts Water Pollution Abatement Trust sold its $566,545,000 of series 2014 state revolving fund refunding bonds on Thursday as well.

The bonds are due 2015 to 2028 with coupons from 2% to 5%.

RTA offering ahead

Looking to new issues in the coming week, the Regional Transportation Authority of Colorado is slated to price $431.16 million of series 2014A certificates of participation.

The COPs (A3/A/A) will be offered through J.P. Morgan Securities LLC, Piper Jaffray & Co. and BMO Capital Markets LLC.

The COPs are due 2023 to 2034 with term COPs due in 2039 and 2044.

Proceeds will be used to finance the construction, acquisition and installation of a portion of the North Metro Rail Line in Denver, including the purchase of easements and rights-of-way.

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