Tuesday, Feb. 17, 2015

Municipal Bond Market Comment
Munis are slightly stronger this morning after a quiet day Friday.  Secondary volume was extremely light with not many items out for the bid.   New issue will be quiet this week with only about $4.5bln in new debt scheduled to be priced. The highlights of this week’s calendar are the pricing of $490mln NYC waters and $200mln University of Texas bonds.

Munis continue to see strong fund flows with $460mln in inflows. New money continues to accumulate on the sidelines as buyers have very few places to put it to work.   

In credit news, PR GOs were downgraded late Thursday to B from BB by S&P.  Senior lien COFINA debt was also downgraded to B from BBB.  GO debt was unchanged after the downgrade, however, we saw some weakness in COFINA bonds…4mm COFINA 6.50% of 2044 traded @ 75.25 (8.88%)after trading in the high 70’s for most of January.   

PR Benchmark GOs were mostly unchanged on Friday after last week’s S&P downgrade.  5mln traded @ $82.50(10.03%), which is right around where bonds traded prior to the downgrade. 

30 Day visible supply: $9.53bln

New Issue:
$200mln   Texas State University System                                       Aaa/AAA
$160mln    Scottsdale, AZ G.O.s                                                       Aaa/AAA
$134mln     Kentucky State Education Student Loan Corporation  /AA+

UST 10yr 2.017%