Tuesday, Apr. 28, 2015

Municipal Bond Market
Munis are unchanged this morning after an extremely quiet start to the week.  We expected to see an uptick in flow in the secondary with such a light new issue calendar this week, however, demand was minimal at best.   Attention should be split between the secondary and primary today with one of the larger days of new issuance for the week.  The highlight of today’s calendar will be the pricing of $218mln Humble TX bonds.   30-day supply jumped to $8.7bln from $7.5bln yesterday.

PR benchmarks GOs were unchanged again. GOs continue to trade in the high $70.00s (10.40) to low $80.00s (10.34%) after trading as high as $86.625 (9.56%) in mid-March. Yesterday’s largest trade in the name was 5000m bonds @ $80.125 (10.336%).

In credit news, PREPA was downgraded by S&P Friday to CCC- from CCC.  S&P cited repeated draws on debt service for the downgrade.  We should see very little impact on PREPA debt post downgrade.  At this point, the market is focused on both the extension with creditors and the July bond payments. 

30-Day visible supply: $8.7bln

Deals we will be bidding today:
218,695     Humble, YX Independent School District Bonds *PSF*     2016-2039     Aaa/AAA
28,945     Humble, YX Independent School District Bonds     2016-2030     Aa1/AA-
56,835     Palm Beach County, FL     2016-2035     Aa1/AA+
41,000     Rutherford, TN G.O.s New Money     2016-2035     Aa1/AA+
26,100     Rutherford, TN G.O.s Refunding     2016-2028     Aa1/AA+