Municipal Bond Prices Weaken; Cleveland Sells $82 Million Deal
May 11, 2011
Many buyers of municipal bonds were out of the office, while dealers appeared unwilling to add to their already bursting inventories. Some demand does exist for higher-coupon bonds, which are seen as defensive because their current income can be reinvested as rates rise. Among traded issues, Westside City's 6% securities of 2024 traded Thursday at a 6.49% yield, compared to a 6.42% yield Wednesday. The advance of the municipal-over-bond price spread also ceased Thursday. The MOB, which reached 6 2/32 Wednesday, dropped to 5 31/32 Thursday. Higher yields helped move an $82 million issue of Cleveland parking facilities refunding bonds Thursday. The MBIA-insured bonds yielded up to 5.84% in 2022, up from 5.73% when first brought to market last week. Last week's deal was apparently pulled because of a technicality, and Smith Barney Inc. succeeded Grigsby Brandford as lead underwriter. Despite Thursday's thin markets, the deal managed to sell out, according to Smith Barney. Preliminary yields had to be raised by 0.05 percentage point on five- to 10-year maturities, however, in order to boost demand. No large new issues are expected to be priced Friday.
VastPress 2011 Vastopolis
