Munis freeze as Treasuries sell off; 30-year MMD falls to 2.79%; Raleigh sells $203.15 million

By Sheri Kasprzak

New York, May 3 - Municipal action slowed dramatically as the market eyed Treasuries, insiders reported. A better-than-anticipated labor report forced a sell-off in Treasuries, said market sources.

Unemployment dropped during the month of April. Employers added 165,000 new jobs, cutting the unemployment rate to 7.5%, the lowest level in four years.

Friday's inactivity comes after a relatively strong week for municipal yields.

"On balance, it's been a good week for tax-exempt performance, especially in longer maturities," said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"The 30-year MMD fell from 2.87% at last week's close to 2.79% [Friday]. Technical factors are favorable for munis. New issue volume is moderate and manageable. Flows from maturities and pre-refunding calls will increase in May."

$16 billion redemptions ahead

Although April only saw $11 billion of redemption proceeds, May's total will be closer to $16 billion, said Schankel, with June and July estimated at $33 billion and $34 billion, respectively.

"Mutual fund flows have been weaker than 2012's, with Lipper reporting nine straight weeks of municipal outflows with the week ending May 1 seeing investors liquidate $102 million of fund holdings," Schankel said.

"More comprehensive ... ICI data, however, has pointed towards a less-negative fund flows picture."

Raleigh details offering

Amid the week's primary action, the City of Raleigh, N.C., sold $203,145,000 of series 2013 combined enterprise system revenue and refunding bonds (Aa1/AAA/AAA), said a pricing sheet.

The deal included $179,675,000 of series 2013A bonds and $23.47 million of series 2013B taxable bonds.

The 2013A bonds are due 2016 to 2025 and 2027 to 2033 with term bonds due in 2038 and 2043. The serial coupons range from 2% to 5%. The 2038 bonds have a 3.375% coupon and priced at 97.127. The 2043 bonds have a 5% coupon and priced at 116.856.

The 2013B bonds are due 2016 to 2022 with 0.65% to 2.14% coupons, all priced at par.

Citigroup Global Markets Inc. was the senior manager for the 2013A bonds, and Baird & Co. was the lead manager for the 2013B bonds.

Proceeds will be used to finance the expansion, improvement and construction of water treatment plants and to refund the city's series 2005 and 2006A revenue bonds.

N.J. Turnpike bonds price

Elsewhere, the New Jersey Turnpike Authority priced $90.88 million of series 2013F fixed-rate turnpike revenue bonds, the fixed-rate portion of a larger offering of Sifma index bonds sheet.

The bonds (A3//A) were sold through senior manager Citigroup.

The bonds are due 2026 to 2035 with 3% to 5% coupons, said a pricing sheet.

Proceeds will be used to refund the authority's series 2003C-1 revenue bonds, series 2005C revenue bonds and 2012D-E revenue bonds.

© 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.