Municipal Bonds Slide Ahead of Jobs Report
May 19, 2011
Underwriters said they were keen to sell new issues early in the day to reduce the risk of carrying unsold balances into the next session. The $163.6 million high-yield bond offering from Piedmont Municipal Power Agency, S.C., was the centerpiece of Thursday's $263 million tax-exempt issues. The offering will help Piedmont restructure its debt, allowing it to replace old noncallable, insured obligations with callable, uninsured bonds. J.P. Morgan Securities Inc., the lead underwriter, initially set yields as high as 6.691% for bonds due in 2021. But yield-hungry investors, mostly mutual funds, lined up for the offering, forcing J.P. Morgan to lower the yields some 0.05 to 0.06 percentage point. The 2021 maturity was repriced to yield 6.641% even as yields in the broader market moved in the opposite direction. While the Piedmont deal sold out, unsold balances remained on two other issues priced Thursday. Merrill Lynch & Co. had $7.5 million left of $28 million in Methuen, Mass., general obligation bonds, priced earlier Thursday. The bonds were reoffered at yields as high as 5.85% in 2014 for the insured, triple-A-rated issue. Smith Barney Inc. said $8 million of a $42 million issue of Austin, Texas, public improvement bonds were unsold. The bonds were reoffered at yields as high as 5.65% in 2011.
