Municipals edge higher with improved Treasuries; supply falls as Natgasoline offering delayed

By Sheri Kasprzak

New York, Oct. 26 – Yields on top-rated municipals fell slightly on Monday after Treasuries were boosted by negative housing data, market insiders reported.

The 10-year muni bond yield fell by 1 basis point to close the day at 2.08%, and the 30-year yield was also down 1 bp at 3.13%.

Meanwhile, a double-digit drop for new home sales sent Treasury yields lower with the 10-year benchmark note falling 2 bps to 2.07% and the 30-year yield falling 3 bps to 2.87%.

One trader said October was a relatively stable month for munis with benchmarks staying within a 5 bps band throughout the month.

Supply at $4.5 billion

Looking to this week, expected new-issue supply dropped to about $4.5 billion after the week’s largest new-money deal was postponed to next week.

Mission Economic Development Corp. of Texas will now sell $1.4 billion of revenue bonds for Natgasoline next week. The deal includes $1,159,860,000 of series 2015A taxable senior lien bonds and $240.14 million of series 2015B tax-exempt junior lien bonds.

The corporation is selling the debt to construct, equip and install a methanol production facility in Beaumont, Texas.

BofA Merrill Lynch is the bookrunner.

Tennessee, Texas deals set

Now leading the charge for the week’s new issues is the State of Tennessee, which is on tap to price $416.32 million of general obligation bonds (Aaa/AA+/AAA) through Morgan Stanley & Co. LLC.

The deal includes $320 million of series 2015A G.O. bonds and $96.32 million of series 2015B G.O. refunding bonds.

Proceeds will fund statewide capital projects, retire at maturity certain commercial paper notes and refund the state’s series 2009A and 2010A G.O. bonds.

In other state offerings, the State of Texas will hit the market with $222,475,000 of water financial assistance G.O. bonds (Aaa/AAA/AAA) through Jefferies & Co.

Those bonds are due 2021 to 2035 with term bonds due in 2040 and 2045.

Proceeds will finance water assistance projects to qualified governmental entities.

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