Municipal Bond Sales Slow as Michigan Yields Fall Most for 2014

2014-12-22 13:06:56.34 GMT
By Ken Kohn

(Bloomberg) -- Municipal bond sales in the U.S. are set to decrease in the next month while the amount of redemptions and maturing debt falls.

States and localities plan to sell $3.9 billion of bonds over the next 30 days, according to data compiled by Bloomberg.

A week ago, the calendar showed $6.3 billion planned for the coming month. Supply figures exclude derivatives and variable- rate debt. Some municipalities set deals less than a month before borrowing.

Colorado plans to sell $245 million of state tax and revenue-anticipation notes. Midpeninsula Regional Open Space District, California, will offer $25 million.

Bonds of Michigan and California had the best performance over the past year compared with the average yield of AAA rated 10-year securities, the data show. Yields on Michigan’s notes narrowed 16 basis points to 2.38 percent while California’s declined 7 basis points to 2.35 percent.

Gap Widens

Puerto Rico and New Jersey handed investors the worst results. The yield gap on Puerto Rico notes widened 52 basis points to 9.47 percent and New Jersey’s rose 17 basis points to 2.67 percent.

Municipalities have announced $15.7 billion of redemptions and an additional $10.3 billion of debt matures in the next 30 days, compared with the $26.2 billion total that was scheduled a week ago.

The $3.5 trillion municipal market contracted by $619 million last month. Sales of $34.8 billion compared with redemptions and maturing debt that totaled $35.5 billion.

Investors added $1.1 billion to mutual funds that target municipal securities in the week ended Dec. 10, compared with $841 million in the previous period and the one-year average of $318 million, according to Investment Company Institute data compiled by Bloomberg.

State and local debt maturing in 10 years now yields 97.7 percent of Treasuries, Bloomberg data show. Over the past fourteen years, the average has been 94.7 percent.