Municipals down as nonfarm payrolls jump more than expected; Pennsylvania to price $1.2 billion

By Sheri Kasprzak

New York, Aug. 5 – Municipal closed a lighter session on a weaker note as Treasuries dove on better-than-expected nonfarm payrolls numbers, traders said.

The 10-year triple-A muni bond yield closed the week up 2 basis points at 1.48%.

Looking to Treasuries, the market tanked after nonfarm payrolls reportedly skyrocketed by 255,000 for July, substantially overshooting economists’ expectations of an 180,000 increase. The five-year Treasury note yield rose 10 bps to 1.13%, and the two-year note yield ended the session 8 bps higher at 0.72%. The 10-year note yield rose 8 bps to 1.59%, and the 30-year bond yield rounded out the day up 7 bps at 2.32%.

Moving to the new-issue calendar for the week ahead, supply is expected to be more subdued, with about $7.9 billion on tap.

Pennsylvania G.O. bonds set

Headlining the lighter calendar is a $1,208,725,000 offering of general obligation bonds from Pennsylvania.

The bonds (Aa3/AA-/AA-) will be sold competitively on Tuesday.

The bonds are due 2017 to 2036, and proceeds will fund capital facilities projects.

University of California ahead

Another $1 billion-plus offering will come from the Board of Regents of the University of California, which is scheduled to price $1,048,850,000 of series 2016 medical center pooled revenue bonds on Wednesday.

The bonds (Aa3/AA-/AA-) will be sold on a negotiated basis with Barclays, J.P. Morgan Securities LLC and Siebert Brandford Shank & Co. LLC as the senior managers.

The deal includes $807.17 million of series 2016L tax-exempt bonds and $241.68 million of series 2016M taxable bonds.

Maturities for the bonds have not been set.

Proceeds will be used to finance capital projects at the UC Davis Medical Center, the UC Irvine Medical Center, the UCLA Medical Center and the UC San Diego Medical Center.

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