Municipal yields seen firmer; week's issuance expected to be light; mutual fund outflows slow

By Sheri Kasprzak

New York, Feb. 22 - Municipal yields closed out the first day back following the Presidents Day holiday on a firmer note with yields improved by 3 to 4 basis points across the yield curve, traders reported.

"I suspect there won't be a lot of movement this week overall," noted one trader.

"It's a short week, and there's not a lot of supply. I feel that trading is probably going to be hit-or-miss most of the week, but I don't foresee any major activity. It's going to be quiet."

Meanwhile, mutual fund outflows continued to slow, according to Alan Schankel, managing director with Janney Montgomery Scott LLC.

"Fund outflows continue to diminish, with Lipper reporting just under $1 billion of redemptions of tax-free mutual funds in the week ending Feb. 16, the slowest pace since early December," noted Schankel.

Additionally, municipal-to-Treasury ratios were at the lowest level of the year last week, said Schankel.

"Yields dropped with the 10-year MMA benchmark, finishing at 3.36%, down 13 bps on the week and the 30-year 14 bps lower at 5.04%," he said.

Primary action for the week will remain light, led by Illinois' long-anticipated $3.7 billion of general obligation bonds set to price during the week through joint bookrunners Morgan Stanley & Co. Inc., Goldman Sachs & Co. and Loop Capital Markets LLC.

The bonds, which are due 2014 to 2019, will finance pension requirements and school capital needs.

Houston, Kentucky deals ahead

Looking to Wednesday's primary action, the City of Houston will bring to market $280.64 million of series 2011A combined utility system revenue refunding bonds (/AA/AA-/) through Rice Financial Products Co.

The city intends to use the proceeds to refund its series 2004C-1, 2004C-2A and 2004C-2B bonds.

Also coming up on Wednesday, the Kentucky Asset/Liability Commission is scheduled to price $269.7 million of series 2011 general fund first series taxable funding notes, said a sales calendar.

The bonds (Aa2/A+/AA-) will be sold on a negotiated basis with J.P. Morgan Securities LLC as the senior manager.

Proceeds from the offering will be used to refinance debt service savings internal loans from the Kentucky Teachers' Retirement System that covered retiree medical benefits over a period beginning in 2005.

Louisville plans bonds

Another major deal out of Kentucky will come from the Louisville and Jefferson County Metropolitan District, which is set to bring $226.34 million of series 2011A sewer and drainage system subordinated bond anticipation notes competitively on Wednesday.

The BANs (MIG 1/SP-1+/F1+) are due March 1, 2012.

Proceeds will be used to pay and retire the district's series 2010A sewer and drainage system subordinated BANs, which were used to refund its series 1999A sewer and drainage system revenue bonds.

First American Municipals Inc. is the financial adviser.

Seattle preps deal

Also ahead, the City of Seattle announced Tuesday that it plans to price $80.405 million of series 2011 limited tax G.O. improvement bonds on March 1.

The bonds (Aa1/AAA/AA+) will be sold competitively with Seattle-Northwest Securities Inc. as the financial adviser.

The bonds are due 2012 to 2031, according to a preliminary official statement.

Proceeds will be used to finance general capital expenditures.

© 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.