Managers See Strong Demand For Muni Issues Later in Week
April 03, 2011
``We attribute that to a reduction in supply and better technicals in the muni market,'' said Patsy Coy, who manages about $1 billion in tax-exempts for Banc One Investment Advisors Corp.. Demand from individuals is slightly more subdued now that insured bonds due in 30 years yield about 5.85%, participants said, but the tax-exempt new issue calendar is so light this week that new issues should have no trouble selling. ``We're probably another rally away from retail starting to fade a bit,'' adds Michaele Benoit, a tax-exempt portfolio manager at Flagship, a Dayton, Ohio, mutual-fund group. The Florida Board of Education will attempt once again Tuesday to sell $212 million of public education capital outlay bonds at competitive bidding. The state last Tuesday rejected bids from separate Morgan Stanley & Co. and Merrill Lynch & Co. groups because of discrepancies. The two firms will vie for the issue again. The credit is viewed as a tired name by many bond-fund managers because of frequent debt sales. Still, the bonds are expected to be priced more aggressively than they would have been last week because bond markets are higher and supply is constricted, Mr. Benoit said. Secondary market issues Monday ended flat to down about 1/4 point in quiet activity. Cook County 5 7/8s of 2022 were quoted off 1/8 at 97 3/8-97 3/4, yielding 6.05%.
