Municipals close week unchanged ahead of lower supply; William Beaumont Hospital bonds ahead

By Sheri Kasprzak

New York, April 25 - The municipal market was quiet on Friday ahead of what is expected to be a much more subdued week, market sources said.

Yields were mostly unchanged on Friday as investors awaited the coming week's much-smaller slate of new issues. About $4 billion of new offerings are expected to price.

Meanwhile, Treasuries got a boost from continued violence in Ukraine, driving investors to safe-haven investments.

The 10-year Treasury note yield fell 2 basis points to close the session at 2.668%. The 30-year bond yield fell by 1.5 bps to 3.448%, and the five-year note yield fell by 1.5 bps to 1.728%.

Beaumont deal set

Heading up the new issue supply for the week ahead, which will be about half of the previous week's supply, will be a $450 million offering of hospital revenue refunding bonds from Michigan's Royal Oak Hospital Finance Authority for the William Beaumont Hospital Obligated Group.

The bonds (A1/A/) will be sold through Morgan Stanley & Co. LLC.

Proceeds will refund existing revenue bonds sold for the obligated group.

Ohio bonds ahead

Also coming up, the State of Ohio is set to price $337,415,000 of series 2014 general obligation refunding bonds competitively on Wednesday.

The offering includes $161.78 million of series 2014A common schools G.O. bonds, $116.01 million of series 2014B higher education G.O. refunding bonds and $59,625,000 of series 2014C infrastructure improvement G.O. refunding bonds.

The bonds (Aa1/AA+/AA+) will be utilized to refund the state's series 2006D and 2007A common schools G.O. bonds, its series 2006A-B higher education G.O. bonds and its 2005A, 2006A and 2007A infrastructure improvement G.O. bonds.

High-grade munis return 4.5%

Potentially rising interest rates have done little to deter municipals, said J.R. Rieger, global head of fixed-income indexes with S&P Dow Jones Indices. Long bonds have been the best performers.

The S&P Municipal Bond 20 Year High Grade Rate index has returned 10.16% for the year to date with yields dropping by over 65 bps since year's end, Rieger said Friday.

Non-callable five-year municipals tracked in the S&P AMT-Free Municipal Series 2019 index have returned more than 2%, and bonds in the 2023 index have returned more than 5.7% year to date.

Investment-grade munis tracked in the S&P AMT-Free Municipal Bond index have returned 4.5% year to date, outpacing corporates and the S&P 500, Rieger wrote.

© 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.