Municipals end firmer ahead of $10 billion supply; two New Jersey transportation sales set

By Sheri Kasprzak

New York, April 15 - Municipals closed out Monday on a firmer note with trading grinding to a halt following the Boston Marathon bombings in the afternoon.

Trading activity was busy in the morning and early afternoon but slowed dramatically late in the day, said one trader.

Stocks dropped after the explosions in Boston, lending some strength to Treasuries and municipals, said the trader.

Municipal yields were down by 1 basis point to 3 bps, with the most improvement seen around 30 years, the trader said.

In the broader market, tax-exempt municipal benchmark yields have continued to slide over the first two weeks of April, said Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC.

"The 10-year AAA Municipal Market Data yield fell 17 bps and ended last week at 1.72%, down from 1.89% as of April 1," Kozlik wrote Monday.

Supply seen at $10 billion

For the week ahead, Kozlik said new-issue volume will be about $10 billion, with an average issue size of about $40 million.

Transportation offerings will be among the largest deals of the week, including deals from the New Jersey Turnpike Authority, New Jersey Transportation Trust Fund and the Illinois State Toll Highway Authority, as well as the Pennsylvania Turnpike Commission.

The New Jersey Turnpike Authority is slated to sell $736,105,000 of series 2013 turnpike revenue bonds in four tranches, three of which are floating-rate bonds and one of which is a fixed-rate bond.

The bonds will be sold through Citigroup Global Markets Inc.

Also out of the Garden State, the New Jersey Transportation Trust Fund will offer $875 million of series 2013 transportation system refunding bonds (A1//A+) through Goldman Sachs & Co. That deal will be conducted in two tranches.

Illinois toll highway on tap

In other transportation-related offerings, the Illinois State Toll Highway Authority is expected to hit the market this week with $500 million of toll highway revenue bonds (Aa3/AA-/AA-) through J.P. Morgan Securities LLC and Loop Capital Markets LLC.

The proceeds from that deal will pay for a portion of the state's 15-year $12.1 billion capital improvement plan.

On Tuesday, the Pennsylvania Turnpike Commission is scheduled to sell $95.46 million of motor license-enhanced turnpike subordinated special revenue bonds (A1/A-/AA) through Piper Jaffray.

Proceeds from that deal will be used to make payments to the Pennsylvania Department of Transportation to fulfill a portion of its commitments under Pennsylvania's Act 44 transportation statute, which funds transit capital projects and provides transit operating subsidies.

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