Municipals weaken along with Treasuries ahead of much-lighter calendar; Texas A&M bonds ahead

By Sheri Kasprzak

New York, Sept. 3 - Municipal yields climbed by 4 basis points to 8 bps across the yield curve with long bonds taking the brunt of the beating Tuesday following closely with Treasuries, market sources said.

Supply during the week will be extremely light, said one trader during the afternoon, all but eliminating supply pressure and leaving the muni market even more susceptible to movements in the Treasuries market.

"I imagine we probably will follow Treasuries [this week], and there's so many headlines out there right now that it could be a pretty volatile week."

This volatility comes during a holiday-shortened week in which supply will be lighter than usual.

Moving to Treasuries, the 30-year bond ended Tuesday up 8.5 bps at 3.789%, and the 10-year note was up 7 bps at 2.86%. The five-year note yield was up 3.5 bps at 1.684%.

Texas A&M deal set

Looking to the week's new-issue supply, the Texas A&M University System is slated to price $352,825,000 of series 2013D taxable revenue financing system bonds, one of the largest deals of the week.

The bonds (Aaa/AA+/AA+) will be offered through senior manager Wells Fargo Securities LLC.

The bonds are due 2016 to 2043, and proceeds from the sale will be used to redesign Kyle Field football stadium and to fund capitalized interest.

Portland debt ahead

In Thursday's competitive offerings, the City of Portland, Ore., is ready to price $215.52 million of series 2013A senior-lien sewer system revenue and refunding bonds (Aa3/AA-/).

Those bonds are due 2014 to 2038.

The proceeds will be used to finance capital facilities and improvements to the city's sanitary sewer and storm water drainage system and to refund the city's series 2003A second-lien sewer system revenue bonds.

The offering is one of the few competitive deals hitting the market during the week.

Detroit financing peculiar

In bankruptcy news, the City of Detroit recently issued a request for proposals for a $350 million debtor-in-possession financing. Detroit is the first U.S. city in history to seek such a financing.

The move is atypical of Chapter 9 filings, said Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC.

"Such structures occur in Chapter 11 cases but not normally in Chapter 9 municipal bankruptcies," Kozlik said Tuesday.

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