Muni Bond Trading Quiets, As New York Issue Sells Well
April 27, 2011
Several muni bond fund managers said the yields on the New York state issue were fair compared to national scales. The GOs yielded a maximum 5.75% in 2024. Interest from bond funds supported the deal, according to lead underwriter Prudential Securities Inc.. The account was closed without price adjustments. The supply of New York paper continues to be perceived as relatively light, even though the state sold multiple large issues this summer. Demand for the triple tax-exempt paper should remain strong because the amount of New York bonds coming down the pipeline will remain manageable, market professionals said. The state's outstanding general obligation bonds are rated single-A by Moody's Investors Service Inc. and single-A-minus by Standard & Poor's Ratings Group. Meanwhile, activity in the secondary market died down a bit from Tuesday's hectic pace and fewer institutions put out bid lists. Fund managers had flooded the market with more than $400 million in bid-wanted lists Tuesday, but lists Wednesday totaled a more typical $250 million. A fair amount of New York paper and higher-yielding bonds appeared on many lists, traders said. Among actively quoted bonds, Cook County, Ill.'s 5 7/8% securities due in 2022 bonds ended 1/8 lower, at 99 7/8 to 100 1/8, yielding 5.87%. In futures, the September contract of the municipal bond index gained 6/32 to 115 3/32, while similar-term Treasury futures rose 1/8 to 111 1/32. The cash market ended slightly lower. Other primary market issues also sold well, particularly shorter-term securities. On the Dade County School Board, Fla.'s $144 million of certificates of participation, senior manager Lehman Brothers repriced the bonds to lower the 2012 and 2013 maturities by 0.05 percentage point. The top yield on the AMBAC-insured bonds was 5.77% in 2019 and 2026. More Florida paper is on the way Thursday, with the state's Department of Transportation scheduled to sell $150 million of general obligation bonds.
