Municipals close mostly flat ahead of new-issue calendar; investment-grade munis return 5.52%

By Sheri Kasprzak

New York, July 7 – Municipals were largely unchanged, despite improved Treasuries, as the market awaits a larger new-issue calendar, market insiders said.

Yields were perhaps a touch firmer in longer maturities, said a trader reached in the afternoon, with shorter maturities holding steady.

Meanwhile, investment-grade municipal bonds, as measured by the S&P National AMT-Free Municipal Bond index, were down on the week, returning negative 0.37% for the week ended July 4, said Kevin Horan, director of fixed income indices with Dow Jones S&P Indices. The index has returned 5.52% on the year.

After a rough week for trading in Puerto Rico, the S&P Municipal Bond Puerto Rico index dropped to a negative 0.16% return at the end of June after returning as much as 10.65% year to date.

Puerto Rico debt has struggled amid ratings agency downgrades following legislation that would allow public corporations to restructure debt and potentially default on their obligations.

Massachusetts deals abound

Looking to the specific offerings in the week ahead, the Massachusetts School Building Authority is set to price $300 million of series 2014A subordinate dedicated sales tax bond anticipation notes on Wednesday through competitive bid.

The notes (MIG1/SP-1+/F1+) will be used to finance grants to cities, towns and other local entities for school construction and improvement projects.

Port bonds ahead

Also out of Massachusetts, the Massachusetts Port Authority is set to price $251.73 million of series 2014 revenue bonds (Aa3/AA-/AA) through Raymond James/Morgan Keegan on Tuesday.

The deal includes $45,715,000 of series 2014A non-AMT bonds, $48,915,000 of series 2014B AMT bonds and $157.1 million of series 2014C non-AMT refunding bonds.

Proceeds from the deal will be used to refund the authority’s series 2012A commercial paper notes and its series 2003A, 2003C and 2005A revenue bonds.

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