Municipals end on positive note, ignoring weakness in Treasuries; Dignity Health deal set

By Sheri Kasprzak

New York, Oct. 3 – Municipals closed the week firmer, shrugging off weakness in the Treasuries market sparked by a positive nonfarm payroll report for September, market sources said. Secondary action remained solid throughout the day, traders noted.

Muni yields were unchanged to firmer with yields dropping particularly in the middle and long end of the curve. Yields between 20 and 30 years were lower by about 2 basis points, said a trader in the afternoon. Treasuries were mixed at the close with the 30-year bond yield dropping by 2 bps and the 10-year note yield climbing by 1 bp.

The calendar for the week ahead is somewhat lighter. Supply this week was pushed in no small part by a couple of $1 billion-plus offerings.

Dignity Health sets deal

The largest deal in the coming week is from Dignity Health out of California, which is on tap to offer $718 million with an option to upsize to $888 million.

The series 2014A taxable bonds (A3/A/A) will be sold through senior managers J.P. Morgan Securities LLC and Citigroup Global Markets Inc.

Proceeds from the deal will be used to reimburse the health care system for previous capital expenditures, to fund future capital expenditures, to refinance existing bonds and to refinance amounts drawn on a line of credit facility.

Port authority plans offering

Another major deal in the week ahead comes on Thursday from the Port Authority of New York and New Jersey. The authority will price $650 million of consolidated bonds in two tranches.

The deal includes $400 million of series 186 bonds and $250 million of series 187 bonds.

Wells Fargo Securities LLC (//AA-) is the lead manager for the offering.

Proceeds will refund existing consolidated bonds.

Alachua, Texas bonds trade

Looking to that active secondary market, Alachua County Health Facilities Authority out of Florida saw some significant secondary interest in its Shands Teaching Hospital and Clinics bonds, which priced on Wednesday. The 4% 2044s were trading in a range of 3.878% and 4.143%, ending the session at 4.057%. The bonds priced at a yield of 4.15%.

The Texas Transportation Commission’s highway G.O. bonds, which priced and upsized to $1.26 billion Thursday, also saw a lot of interest in the secondary market. The 5% 2039s were seen trading at 3.019% at the end of the session Friday after pricing at 3.03%. The 5% 2044s were unmoved from pricing, although trading activity for those bonds was high.

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