Municipal Bonds Slip a Bit, But Traders Stay Optimistic
March 31, 2011
Dealer inventories aren't heavy with bonds, as can be judged by Standard & Poor's Blue List, which has fallen to $886 million par value. Also, muni ratios to Treasurys are expected to hold steady at 82.4% for bonds due in 30 years. And, as usual, demand for tax-exempts continues to outpace supply. Market sentiment was positive early Friday despite lower levels in Treasurys, but as the bid side grew weaker in the afternoon, many participants headed out of the office early. 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. Several fairly large blocks of bonds were placed out for the bid early in the session, one trader noted. Those institutional sells lists mostly contained Uptown paper with maturities of 15 to 20 years. Most of the bonds traded at prices unchanged from Thursday's levels. Next week's calendar is relatively light; one deal that was pulled this week will steal the spotlight. A $212 million Northville Board of Education deal that was withdrawn after bidding problems will most likely be priced Tuesday via competitive bidding. Morgan Stanley & Co. and Merrill Lynch & Co. groups will bid on the bonds. Among actively quoted bonds, the Hawaii Department of Budget and Finance's 6s of 2020 revenue bonds yielded 6.05%, compared with 6.00% late Thursday. In futures activity, the September contract of the municipal bond index ended down 5/8 at 112 13/32, while similar-term Treasury futures were 21/32 lower at 109 2/32.
VastPress 2011 Vastopolis
