Municipals flat to firmer as market awaits primary; about $10 billion in new deals on tap

By Sheri Kasprzak

New York, Nov. 26 - Municipal yields were flat to slightly firmer, particularly 10 years and out, traders said Monday.

Yields were seen better by 1 basis point to 2 bps in spots outside of 10 years, said one trader reached during the session.

"A lot of the market is being driven by reinvestment," said a trader.

"We're not moving by too much, but there's some slight firmness beyond 10 years. The market is waiting for primary to pick up tomorrow."

Early in the session, stronger Treasuries helped municipal yields improve somewhat, said a trader.

"There's not a lot of trading. There's nothing pricing; so, we're mostly unmoved."

About $10 billion ahead

Looking to the week ahead, the market is gearing up to welcome about $10 billion in new offerings, said Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC.

"Now that the November holidays are behind us, we are bracing for a rush of municipal volume before the regular lull we experience closer to the December holiday season," Kozlik said Monday.

The new offerings will be led by a substantial deal from Miami-Dade County, Fla.

The county intends to sell $808.45 million of series 2012 aviation revenue refunding bonds through Bank of America Merrill Lynch.

The deal will be conducted in two tranches. The sale includes $700,435,000 of series 2012A AMT bonds and $108,015,000 of series 2012B non-AMT bonds.

The bonds (A2/A/A) will be used to purchase direct government obligations.

Two Miami-Dade deals set

The aviation offering is one of two sales out of Miami-Dade County.

The Miami-Dade County Educational Facilities Authority is expected to price $120,555,000 of series 2012 revenue bonds (A3/A-/) through Morgan Stanley & Co. LLC.

The sale includes $95,315,000 of series 2012A tax-exempt bonds and $25.24 million of series 2012B taxable bonds.

Proceeds from the offering will be used to finance the construction, renovation, improvement and equipment of University of Miami facilities.

Congress eyed

Now that the U.S. Congress is back in session, fixed-income municipal investors will be focused on happenings in D.C., said Kozlik.

"Much of the recent commentary on the topic has been rather positive and optimistic, with pundits and politicians noting that the path to a deal is clear," said Kozlik.

"We will see if this analysis is reflective of lawmakers' true stances. While we are not sure exactly what is going to be decided in the short term, we are expecting that federal government spending overall is going to be lower and there is likely going to be lower amounts of funds funneled down to state, local and other municipal issuers. How this is going to shape the future of municipal credit is a bit of an unknown but, if issuers have illustrated anything over the last few years, it is that they are able to adjust to almost any federal budget scenario possible."

© 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.