Municipal Bonds Inch Higher As Market Awaits New Issues
May 19, 2011
Gainers included the Chicago Board of Education 6s of 2026. They advanced 1/2 at 98 3/4 to 99 1/8 at the close of the fairly active session, yielding 6.06%. The thousands of retail investors clicking into Internet brokerage services can't get anywhere near the municipal bond market. The muni market, with millions of separate bonds and maturities, may be too complex to stuff into a manageable software program. Xander Mellish investigates in this week's Muni Telescope. On the futures side, December munis outperformed Treasurys, causing the municipal-over-bond spread to widen to 150/32 from 139/32 Thursday. Muni-index contracts settled 22/32 higher at 111 14/32, near the top of the day's broad range of 109 15/32 to 111 3/4. There was a gain of just 11/32 for the December Treasurys, which finished at 106 3/4. Because the August jobs report contained various figures that were both as-anticipated and unexpectedly strong, whipsaw price movements occurred in the U.S. bond markets. Prices initially fell sharply, only to rebound and ultimately finish the day with a rally. It remains be seen, though, whether the Federal Reserve will be spurred to tighten credit by this session's news. The next Federal Open Market Committee meeting is June 06, 2011 the meantime, the muni market's tight supply will remain a top concern, traders said. About $1.45 billion of long-term munis were awarded to underwriters in the week ended late Thursday -- down from $2.05 billion of bonds the prior week, Securities Data Co. said. Next week's muni pricing calendar contains a scant $1.6 billion of debt, when anticipated bond and note issues of $25 million or more are totaled. The Washington Public Power Supply System, one of the muni market's most notorious defaulters on debt, is scheduled to sell about $325 million in refunding revenue bonds Tuesday via a Goldman Sachs & Co. group. The bonds will be insured by AMBAC and MBIA. The size of the refunding had been projected as high as $600 million, but the issuer had made clear that the amount would be subject to market conditions. Power system officials couldn't be reached to comment about the issue's smaller size. The week's largest competitive deal, a $208 million refunding for the Lower Colorado River Authority -- will be put out for bids Tuesday. Another large competitive issue, $115 million of Wisconsin general obligation bonds, will be bid for Wednesday.
VastPress 2011 Vastopolis
