Muni yields end slightly higher as Treasuries slide; demand strong ahead of $5 billion slate

By Sheri Kasprzak

New York, Aug. 18 – Municipals closed Monday weaker but outperformed a struggling Treasuries market, sources reported.

High-grade municipal yields were higher by 2 basis points to 4 bps across the curve. Trading action was very light, said a trader during the afternoon.

Meanwhile, Treasuries tumbled after international worries eased. The 30-year bond yield was up 6.5 bps at 3.199%. The 10-year note yield rose 5 bps to 2.393%, and the five-year note yield climbed by 3 bps to 1.572%.

Back in municipals, demand remains strong, according to Investment Company Institute data. During the week of Aug. 6, inflows to municipal mutual funds were reportedly $454 million.

Even so, at about $5 billion, this week’s supply will be about half of last week’s supply, said Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC.

San Diego RTC deal set

Heading up that modest slate of offerings is a $350 million deal from the San Diego County Regional Transportation Commission.

The commission will offer series 2014A sales tax revenue bonds (/AAA/AAA) through Citigroup Global Markets Inc.

The bonds are due 2015 to 2034 with term bonds due in 2039, 2044 and 2048.

Proceeds will be used to finance highway improvements to the Interstate 5, Interstate 15, Interstate 805, State Route 52 and State Route 76 corridors and to retire subordinated commercial paper notes.

Wake County to price

Moving to the competitive market, Wake County, N.C., has the largest competitive deal this week with $345.24 million of series 2014 general obligation public improvement bonds (Aaa/AAA/AAA) expected on Tuesday.

The bonds are due 2016 to 2034.

Proceeds will finance capital projects.

U of Colorado bonds ahead

Also during the week, the University of Colorado will offer up a two-tranche deal totaling $303.49 million.

The university plans to price $210.19 million of series 2014A bonds and $93.3 million of series 2014B-1 refunding bonds.

The bonds (Aa2//AA+) will be sold on Wednesday through Stifel, Nicolaus & Co. Inc.

Proceeds will be used to fund capital improvement projects for the university.

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