Municipals weaker as supply tapers to $5.2 billion; New Jersey student loan notes to price

By Sheri Kasprzak

New York, May 13 - Municipal yields were off slightly on Monday ahead of a rather subdued week for new issues, traders said.

Retail order periods were few and far between, said one market source, and with little activity, yields were little changed.

Ten-year AAA MMD yields rose 13 basis points between May 3 and May 10 to end at 1.81%, said Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC, and 30-year yields closed up 11 bps week over week to close at 2.93%.

"Since the beginning of May, the 10-year benchmark is now 15 bps higher, while the 30-year is up 14 bps in yield," Kozlik wrote Monday.

"Municipal-to-Treasury, or M/T ratio, dropped to 94% from 98% since the beginning of the month."

Flows are positive

Elsewhere in the market, Investment Company Institute data indicates that flows to municipal mutual funds have been positive, with $73 million during the week of May 6, Kozlik said, noting it was the second positive reading since tax season.

"This week, there is once again just over $5 billion of primary market municipal issuance anticipated for the municipal market," Kozlik wrote.

"Leading the week's issuance is taxable $366 million Dallas and Fort Worth, Texas, airport financing."

Dallas Airport deal set

The Cities of Dallas and Fort Worth are set to hit the market with $366,545,000 of series 2013B joint revenue improvement bonds for the Dallas/Fort Worth International Airport.

The bonds (A2/A+/A) will be sold through senior managers Morgan Stanley & Co. LLC and Cabrera Capital Markets LLC.

The bonds are due 2026 to 2050, and proceeds from the offering will be used to finance improvements and additions to the airport.

New Jersey Higher Ed notes ahead

Looking to the week ahead, the New Jersey Higher Education Student Assistance Authority is scheduled to price $200 million of series 2013 student loan revenue notes during the week, according to a sales calendar.

The notes will be sold through senior manager BofA Merrill Lynch.

The offering includes series 2013-1A notes (/AA(sf)/) and 2013-1B notes (/A(sf)/).

The notes are backed by private fixed-rate student loans made under the New Jersey Higher Education Student Assistance Authority's NJCLASS loan program.

Standard & Poor's analyst Mark W. O'Neil on Monday wrote that the notes' ratings were influenced by the loan pool's anticipated strong credit characteristics, which will be mostly loans to undergraduates, cosigned by obligors with FICO scores expected to average about 745. Also, the authority's timely interest and principal payments made under stressed cash flow modeling scenarios are consistent with AA(sf) and A(sf) ratings, O'Neil noted.

Proceeds will be used to finance student loans.

© 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.