Muni yields a touch off in light trading action; $5.2 billion new deals expected in week ahead

By Sheri Kasprzak

New York, May 31 - Municipals were little moved to slightly weaker on Friday to close out a difficult week for the market, traders said.

"Secondary is very light, and there's next to nothing going on in primary, so it's quiet," a trader said.

"I think we need a quiet day."

At the end of the session, yields were pushed up slightly following a Treasuries sell-off.

Price discovery has been difficult for the past several session, traders have noted, leaving munis to follow Treasuries.

The week saw yields climb every day, with yields up as much as 10 basis points at times. In fact, yields are at the highest level in a year, said one market insider reached during the session.

The Metropolitan Transportation Authority of New York successfully priced $500 million of general obligation bonds Thursday, but not without making some slight downward yield adjustments in many maturities in final pricing.

Meanwhile, inflows to municipal mutual funds remains positive with $156 million of inflows for the week ended May 22, a number Alan Schankel, managing director with Janney Montgomery Scott LLC, called "just barely positive."

Massachusetts leads issues

In the week ahead, about $5.2 billion of new offerings are slated to hit the market, led by a $1,115,260,000 offering of series 2013 G.O. bonds from the Commonwealth of Massachusetts.

The state opened a special retail order period for the offering on Friday, and it will last until Monday. Special priority will be given to Massachusetts residents.

The offering includes $640.26 million of series 2013B G.O. refunding bonds, which are due 2013 and 2016 to 2025; $375 million of consolidated loan of 2013 series C G.O. bonds, which are due 2039 to 2043; and $100 million of consolidated loan of 2013 series D green bonds, which are due in 2032.

This marks the first time the state will offer green bonds, which will finance environmental projects.

BofA Merrill Lynch is the senior manager for the bonds (Aa1/AA+/AA+).

Texas A&M deal set

Also coming up in the week ahead, Texas A&M University is set to price $295.01 million of revenue financing system bonds (/AAA/AA+) on Tuesday.

The bonds will be sold in two tranches competitively.

Proceeds will refund the university's series 2002 and 2003A financing system bonds.

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