Municipals improve along with Treasuries; new issue supply calendar to reach about $7 billion

By Sheri Kasprzak

New York, Sept. 6 - Municipals got a boost on Friday from improved Treasuries, market insiders said, with yields dropping by 2 basis points to 5 bps across the yield curve with shorter bonds benefiting the most.

Treasuries got a boost from nonfarm payroll data and more uncertainty in Syria. The five-year note was down 10 bps to end at 1.759%, and the 10-year note was down 6.5 bps at 2.933%. The 30-year bond was down 2.5 bps at 3.863%.

Looking to the week ahead, new-issue supply is expected to jump to about $7 billion, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

For the 15th consecutive week, the market experienced outflows with $1.3 billion of redemptions, Schankel said.

Deal in two tranches

Health-care issuers will dominate the week's offerings, led by Washington state's Providence Health and Services Obligated Group's $580.05 million offering of series 2013 direct obligation notes (Aa2/AA/AA).

The offering will include $252,265,000 of series 2013D taxable notes and $327,785,000 of series 2013E taxable floating-rate notes.

The bonds will be sold through BofA Merrill Lynch.

Proceeds will be used to refund the obligated group's series 2004 revenue bonds and finance capital projects.

Arkansas G.O. bonds ahead

Also coming up, the State of Arkansas is set to price $495 million of series 2013 general obligation four-lane highway construction and improvement bonds (Aa1/AA/).

The bonds will be sold competitively on Tuesday.

The bonds are due 2014 to 2023, and proceeds from the deal will be used to finance the construction and improvement of a variety of highways as part of the Connecting Arkansas Program.

In other competitive offerings, the City of Richmond, Va., plans to sell $142,855,000 of series 2013 G.O. public improvement bonds (Aa2/AA+/AA+).

The deal includes $131,525,000 of series 2013A bonds and $11.33 million of series 2013B taxable bonds.

Proceeds will be used to reimburse the city for school and general capital improvements and to refund the city's series 2012 G.O. line of credit bond anticipation notes.

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