Municipals hold steady despite weakness in Treasuries; $4.7 billion of new offerings ahead

By Sheri Kasprzak

New York, Feb. 28 - Municipals outperformed a struggling Treasuries market on Friday, with yields better by 2 basis points to 4 bps even as Treasuries sank, market sources said.

Supply in the week ahead should pick up somewhat, but new issues were very thin during the week, alleviating supply pressure, market sources reported.

About $4.7 billion of new issues are expected in the week ahead, according to Alan Schankel, managing director with Janney Montgomery Scott LLC, assuming Puerto Rico's planned $2.8 billion general obligation bond offering is priced in March. The commonwealth passed legislation on Thursday to sell up to $3.5 billion of debt.

Meanwhile, after a revised fourth-quarter GDP estimate were released by the Commerce Department, Treasury prices fell. The five-year note yield rose by 2.5 bps to close at 1.511%, and the 10-year note yield climbed by 1.5 bps to 2.658%. The 30-year bond yield rose by half a basis point to close at 3.593%.

Secondary action for Thursday was reportedly $8.6 billion, according to the Municipal Securities Rulemaking Board, light compared to an $11.4 billion average for the previous Thursdays of the year.

Texas Transportation deal set

Looking to the week ahead, the Texas Transportation Commission is set to price $1,191,990,000 of series 2014 state highway fund first-tier revenue bonds on Thursday, making it the largest offering of the week.

The deal includes $891.99 million of series 2014A revenue refunding bonds and $300 million of series 2014B Sifma index floating-rate bonds.

Piper Jaffray & Co. and Citigroup Global Markets Inc. are the senior managers for the bonds (Aaa/AAA/).

Proceeds will be used to finance state highway projects and refund existing debt.

New York offers debt

Another major offering for the week ahead comes from the City of New York, which plans to offer $650 million of series 2014I-1 general obligation bonds through Citigroup.

The bonds are due 2016 to 2039.

Proceeds from the offering, which is slated to price on Wednesday, will be used to finance capital projects for the city.

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