Municipals improve but underperform Treasuries; Illinois leads $4 billion new-issue calendar

By Sheri Kasprzak

New York, Jan. 31 - Municipals improved after struggling for much of the week, market sources said, gaining some ground thanks to a Treasuries rally. Even so, municipals underperformed Treasuries as investors fled from riskier investments like emerging markets investments.

Secondary action dwindled, traders reported in the afternoon, after picking up steam during the week. Supply is expected to remain light in the week ahead, with just $4 billion of new deals expected to hit the market. January issuance came in at just below $20 billion, significantly less than January 2012's $24 billion pace.

Illinois plans deal

Leading new issues in the coming week, the State of Illinois plans to price $1 billion of series of February 2014 general obligation bonds.

The bonds will be sold through lead manager Citigroup Global Markets Inc.

The bonds are due 2015 to 2034 with a term bond due in 2039.

Proceeds will be used to finance capital development, transportation, school and job development projects within the state.

San Diego airport bonds ahead

Also coming up during the week, the San Diego County Regional Airport Authority is scheduled to price $315,365,000 of series 2014 senior special facilities revenue bonds. Pricing is slated for Tuesday.

The deal includes $30.62 million of series 2014A non-AMT tax-exempt bonds and $284,745,000 of series 2014B taxable bonds.

The bonds (A3/A-/) will be offered through senior managers Siebert Brandford Shank & Co. LLC and J.P. Morgan Securities LLC.

Proceeds will be used to finance the construction of a centralized rental car facility at San Diego International Airport.

Puerto Rico nixed from indexes

Elsewhere, Puerto Rico and other territories were removed from the S&P National AMT-Free Municipal Bond index, according to a report from S&P Dow Jones Indices.

"The objective of the S&P National AMT-Free Municipal Bond index is to be an investable index that measures the performance of the investment-grade tax-exempt U.S. municipal bond market," said the report.

"The index excludes those sectors of the municipal bond market that have historically represented higher risks when compared to investment-grade general obligation and essential purpose bonds. For example, excluded are corporate-backed municipal bonds, multifamily housing and health-care bonds. Puerto Rico municipal bonds are now trading at levels more appropriate for high-yield taxable corporate 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.