Municipal yields end mixed; Fitch downgrades Union County, N.J., ahead of $100 million deal

By Sheri Kasprzak

New York, June 18 - Municipals closed out Monday mixed, but yields were only slightly changed in either direction, market insiders reported.

"It's been a tough session to get a read on market tone today," one trader said.

Bids in secondary, especially for intermediate inventory, were wide, said the trader.

Meanwhile, retail order periods for some of the week's larger deals were being conducted Monday.

The New York City Municipal Water Finance Authority held a retail order period for its $450 million of series 2012 water and sewer second general resolution revenue bonds. The bonds will price for institutions on Tuesday through lead manager Jefferies & Co.

The authority intends to use the proceeds to repay commercial paper notes and to make a deposit to its construction fund.

$10.1 billion

Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC, said Monday that about $10.1 billion of new issues are expected to price this week across a variety of states and sectors.

This variety, Kozlik said, is in stark contrast to last week when a few high-profile deals dominated the action.

Major offerings from the Massachusetts School Building Authority, the State of Louisiana, the State of Georgia and the City of Detroit are all set to price during the week in a good combination of negotiated and competitive deals.

Union County gets downgraded

Meanwhile, Union County, N.J., is gearing up to bring $100 million of series 2012 public improvement bonds competitively on Tuesday. The new offering comes as the county was downgraded by Fitch Ratings to AA+ from AAA, said Kozlik.

"Fitch downgraded Union County, N.J. (Aa1/AA+/AA+), to AA+ from AAA based on its assessment of the county's budget pressures and potential strain from labor contract negotiations," Kozlik wrote Monday.

"The rating cut, 'reflects continued instability in the county's financial performance, resulting in a low current fund balance and financial flexibility inconsistent with the AAA rating category,' according to Fitch. The county also supports a public hospital, which is also a drag on the credit. The rating action affects $476 million of outstanding debt."

The deal includes $62,165,000 of series 2012 general improvement bonds, $23.19 million of series 2012 county vocational-technical school bonds, $10,355,000 of series 2012 redevelopment bonds, $2,353,000 of series 2012A county college bonds and $1,937,000 of series 2012B county college bonds.

The county plans to use the proceeds from the sale to current refund bond anticipation notes.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.