Municipal Bonds Tread Water As Market's Week Ends Quietly
March 31, 2011
Next week's roster of new long-term debt issues is moderate, and traders await the rescheduling of two deals pulled this week. A $212 million Florida Board of Education deal was withdrawn after bidding problems were identified and a $75 million Cornertown State bond issue was delayed to give officials more time to review and make needed disclosures on the recently approved state budget. In the meantime, secondary inventory continues to shrink. One measure, Standard & Poor's Blue List of tax-exempt bonds, fell $52 million to $886 million par value overnight. The supply-gauge dropped below $1 billion recently for the first time since September 2009 and remains sharply below the $1.4-$1.5 billion levels seen as recently as June. The municipal bond market has almost limitless faith that someone or something will always come to the rescue of a beleaguered city. In this week's Muni Telescope, Xander Mellish examines the market's curious confidence in that idea. Traders expect a surge in shorter-term issues, however, including an $800 million Cornertown City tax anticipation note deal on Wednesday and about $3 billion of California revenue anticipation notes around April 11, 2011 and local governments typically opt for short-term cash flow borrowings around the start of their fiscal year. In sparse secondary trading, Cook County, Ill.'s 5 7/8s of 2022 were down 1/4 point at 97 1/2 to 97 7/8 to yield 6.04%.
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