Municipals improve as supply falls a bit after holiday; Pennsylvania readies $1.2 billion deal

By Sheri Kasprzak

New York, May 26 – Municipals got a slight breather Tuesday as supply backed off slightly following the Memorial Day weekend, market insiders said.

The 10-year triple-A rated bond yield fell 5 bps to 2.25%, and the 30-year yield fell 5 bps to 3.23%.

The week will bring about $9.5 billion, a sizable amount given the short week, but Tuesday saw subdued volume, said a trader in the afternoon.

Things will pick up on Wednesday when Pennsylvania brings $1,237,230,000 of G.O. bonds (Aa3/AA-/AA-) through competitive bid.

Looking to last week’s performance, Puerto Rico 8% of 2035s (Caa2/CCC+/B) were trading at levels below 10% for the first time in two months after reports that the commonwealth’s legislature is finalizing an increase in the sales tax rate to 11.5% from 7%, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

Pennsylvania deal ahead

Pennsylvania is on tap to bring its G.O. bonds competitively in the largest sale of the week.

The deal includes $460 million of series 2015 bonds, which are due 2016 to 2035, and $777.23 million of series 2015 first refunding bonds, which are due 2016 to 2026.

Proceeds will be used to provide funding for construction, acquisition and rehabilitation of capital facilities projects, capital highway and bridge projects, environmental maintenance and protection, open space and farmland preservation, watershed protection and to refund outstanding bonds.

HealthPartners bonds set

Also coming up, the Saint Paul Housing and Redevelopment Authority of Minnesota is on deck to price $493,645,000 of series 2015 health-care facilities revenue refunding bonds for the HealthPartners Inc. obligated group on Thursday.

The deal includes $302.18 million of series 2015A tax-exempt bonds and $191,465,000 of series 2015B taxable bonds.

The bonds (A2/A/) will be sold through Piper Jaffray & Co. and Wells Fargo Securities LLC.

Proceeds will be used to refund the obligated group’s series 2006, 2008C and 2009 revenue bonds.

DeKalb brings TANs

Looking to Tuesday’s new-issue action, DeKalb County, Ga., came to market with $74.5 million of series 2015 tax anticipation notes.

The notes (MIG 1//F1+) were sold competitively. The issuer did not immediately respond to requests for the winning bidder.

The notes are due Dec. 28, 2015, have a 1.75% coupon and priced at 100.891 to yield 0.22%, said a pricing sheet.

Proceeds will be used to pay certain current expenses incurred by the county during the 2015 calendar year prior to the receipt of tax revenues.

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