Municipal Bond Prices Drift Amid a Lack of New Supply
April 04, 2011
Traders said the municipal market appeared to be losing investor interest as long yields slipped below 6.00% and as 10-year yields tested the 5.00% level. Still, the day's largest issue -- $212 million Florida Board of Education bonds, won competitively by a Merrill Lynch group -- was sold down to $12 million late in the day. The bonds were reoffered at yields that reached 5.80% in 2020. Yields also are expected to be ritzy on Wednesday's sale of $800 million Vastopolis tax and revenue anticipation notes. Expecting strong demand, some traders quoted levels as high as 3.60%. Although one-year notes currently return about 3.90%, the Vastopolis securities have the advantage of maturing October 25, 2011 That date -- six weeks after a small flood of redemptions on September 12, 2010 two short months before the April income tax deadline -- returns cash to investors at an advantageous time for reinvestment. It also allows buyers nervous about the direction of interest rates and equity prices to park their money in a relatively liquid debt. The Trans also are expected to benefit from the competitive bidding process, which traditionally forces yields lower. Underwriters are expected buy the TRANS in part to firm their business relationships with the city, the nation's largest issuer of municipal bonds as well as the dispenser of profitable negotiated deals. Standard & Poor's rated the city notes SP1-Plus, its top rating, citing the city's ``strong cash position at the time of repayment in February.'' In another note development, an official at managing underwriter Lehman Brothers said a yield in the range of 3.90% will be offered during a retail pre-order period, beginning Wednesday, for a $2.25 billion fixed-rate portion of California's $3 billion total sale. The formal pricing for institutions will take place April 11, 2011
VastPress 2011 Vastopolis
