Municipals close flat ahead of much lighter new issue calendar; Austin gears up for bond deal

By Sheri Kasprzak

New York, Aug. 22 – Municipals rounded out the week mostly flat as the market awaits a lighter-than-usual new-issue slate for the coming week, market insiders said.

Even though municipals largely followed Treasuries throughout the week, yields didn’t budge by much even as Treasuries struggled to find direction after the Jackson Hole, Wyoming, economic symposium.

Treasuries closed out the day mixed after Federal Reserve chairman Janet Yellen said at the conference that a labor “slack” remains in the market even as the economy continues to improve.

After the comments, the 10-year note yield fell by half a basis point at 2.403% but posted a 6 bps gain for the week. Meanwhile, the yield curve continued to flatten as the five-year note yield climbed by 3.5 bps to close at 1.66% and the 30-year bond yield fell by 3.5 bps to 3.158%.

Austin leads calendar

Looking to the coming week, new-issue supply is expected to dwindle substantially with the largest negotiated offering coming from the City of Austin, Texas.

The city plans to price $160.87 million of series 2014 public improvement bonds and certificates of obligation in three tranches during the week.

The offering includes $104.62 million of series 2014 public improvement bonds, $40.45 million of series 2014 certificates of obligation and $15.8 million of series 2014 public property financial contractual obligations.

The bonds (Aaa/AAA/AAA) will be sold through senior managers Baird & Co. Inc. and Cabrera Capital Markets LLC.

The 2014 public improvement bonds are due 2015 to 2034, and the 2014 certificates are due 2015 to 2034. The 2014 contractual obligations are due 2015 to 2021.

Proceeds will be used to finance capital improvements and purchase equipment or personal property for the city.

Texas preps note deal

Over in the competitive arena, the State of Texas will make up the bulk of the week’s volume with a $5.4 billion offering of series 2014 tax and revenue anticipation notes (MIG1).

Those notes will be sold competitively and are due Aug. 31, 2015.

Proceeds from the offering will be used to finance capital expenditures for the coming fiscal year.

Pricing is scheduled for Tuesday.

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