Municipals end week on strong note with Treasuries; NYC Transitional Finance to lead new deals

By Sheri Kasprzak

New York, Jan. 9 – Municipals followed in line with Treasuries to end the week with a stronger tone, market insiders said.

Muni yields were seen 3 basis points to 5 bps lower at the end of the day Friday, said a trader.

Meanwhile, sliding wages in December boosted Treasuries with the 10-year Treasury note yield falling 5 bps and the 30-year bond yield falling by 4 bps. Treasuries rebounded from Thursday’s tumble after Friday’s nonfarm payroll report indicated that wages slid unexpectedly by 0.2% in December.

Supply at $6 billion

In the week ahead, just over $6 billion of new offerings await investors. Demand seems to be following this supply, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

The Investment Company Institute reported $1.4 billion of inflows for the week ended Dec. 30, the most inflows in two years. Lipper reported $1.3 billion of inflows for the week ended Wednesday.

“Mutual funds have cash to invest, reflecting an appetite on the part of retail investors for tax-free income in an era with the highest marginal federal personal income tax rate since the Reagan years,” Schankel said in a note Friday.

NYC deal leads supply

Looking to the coming week’s hearty supply, the New York City Transitional Finance Authority will lead offerings with its $750 million of series 2015-S1 building aid revenue bonds on Wednesday. Retail order periods are set for Monday and Tuesday.

The bonds will be sold on a negotiated basis through Ramirez & Co. Inc. and Goldman Sachs & Co.

The bonds are due 2016 to 2044.

Proceeds will be used to finance some authority building expenditures as part of its five-year capital plan.

Rush University bonds set

Another offering, this one from the prolific health-care sector, comes from the Illinois Finance Authority, which is on deck to price $501.91 million of series 2015 revenue bonds (//A+) for the Rush University Medical Center.

Goldman Sachs and BofA Merrill Lynch are the senior managers.

Proceeds from the deal will be used to refund the medical center’s series 2006 and 2009A-D revenue bonds.

Also coming up this week from the health-care sector is a $135 million offering for the Cottage Health System Obligated Group through the California Statewide Communities Development Authority, a $180 million offering of bonds for the Lakeland Regional Health System through the City of Lakeland, Fla., and a $129 million offering of refunding bonds for ProHealth Care Inc. through the Wisconsin Health and Educational Facilities Authority.

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