After a below-average hurricane season in 2009, this year’s projection compares with several years when the eastern U.S. and Gulf coasts were badly hit, according to Accuweather.com chief long-range meteorologist whose official was released March 14. Five hurricanes are predicted, with two or three being major landfalls, Bastardi said.
Citizens yesterday was offering yields ranging from 2.83 percent for three-year debt to 4.45 percent for 2017 maturities, the chief executive officer of Asset Preservation Advisors, an Atlanta-based firm that invests $1.4 billion in municipal bonds. Yesterday was the second day of retail sales for the insurance fund.
The borrower is taking advantage of the low yields being paid for similar maturities relative to Treasuries, Woods said. Three-year, tax-exempt general obligations with a AAA credit rating, offer a yield that is 58 percent of comparable Treasuries, according to data compiled by Bloomberg. In April when Citizens last came to market, the ratio was 91 percent of the equivalent Treasury. The note yesterday paid 87 basis points compared with 151 basis points on the three-year sovereign.
“The yields they are talking about in the long end are not that attractive given the risk,” Woods said. “That part of the yield curve is very, very expensive.”
Finance for Claims
The issue, which includes short-term notes as well as floating-rate securities, will provide financing to pay claims during the 2010 hurricane season. Underwriters led by JPMorgan Chase & Co. are marketing the securities, which are rated A+ by Standard & Poor’s, the fifth-highest of 10 investment grades, and A2 by Moody’s Investors Service, the sixth-highest.
“Strong retail orders to set the stage for the day of institutional pricing is very important to us,” Citizens’ chief financial officer. “Last year retail comprised a meaningful amount of the total.”
Yields on top-rated general obligations maturing in seven years rose two basis points yesterday, according to a daily survey by Concord, Massachusetts-based Municipal Market Advisors. The 2.37 percent is three basis points above the all- time low. A basis point equals 0.01 percentage point.
“The municipal market is primed for a good rally,” a money manager with New York’s AllianceBernstein LP, which oversees $30 billion in municipal bonds. “I think the market will rally in the coming months as supply diminishes and pressure for higher tax rates continues to build.”
Following are descriptions of pending sales of municipal debt in the U.S.:
plans to sell $897.8 million in tax-exempts tomorrow secured by a senior lien on the revenue of Los Angeles International Airport, according to S&P. LAX is the world’s seventh-busiest airport by passenger traffic, one rank lower than a year ago, Airports Council International said March 17. Proceeds will help fund a $5.6 billion capital improvement plan. The department will issue about $1.9 billion in additional securities after this sale, S&P said. Underwriters led by Siebert Brandford Shank & Co. LLC will market the bonds to investors. S&P and Fitch rated the debt AA and Moody’s assigned Aa3. (Updated March 23)
plans to market $850 million in tax-exempt, fixed-rate bonds March 25. The monopoly power utility will back them with net revenue from the system, Moody’s said. The tax-exempts are the first in a series of sales totaling $1.9 billion, S&P said. Proceeds will help pay down outstanding lines of credit, refinance existing debt and help pay for a capital investment program, S&P said. The securities will be marketed by JPMorgan Chase & Co. and are rated BBB+, the third-lowest investment grade, by Fitch Ratings and S&P, and one notch higher, A3, by Moody’s. (Updated March 23)
CHICAGO TRANSIT AUTHORITY, which manages the second-largest public transportation system in the U.S., plans to sell $550 million in sales-tax revenue bonds today to help finance train upgrades. The CTA will acquire 406 new cars to replace equipment that’s 30 to 40 years old, according to the agency. The total cost of the purchase will be $674 million, the CTA said. Additional funding will come from the Federal Transit Administration and the Illinois Department of Transportation. Underwriters led by Goldman Sachs Group Inc. will market the securities, including $475 million in Build America Bonds. CTA debt is rated A1 by Moody’s and AA by S&P. (Updated March 23)
with nine academic locations and six health institutions, plans to sell $373.3 million of fixed-rate revenue bonds today. Proceeds from the tax-exempts will refinance outstanding debt. The Austin-based system sold $331.4 million of tax-exempt securities last week with yields ranging from 0.66 percent on notes maturing in 2012 to 3.5 percent on those due in 2024. They will be marketed by RBC Capital Markets, a unit of Royal Bank of Canada. The securities are rated AAA by S&P and Fitch, and Aaa by Moody’s. (Updated March 23)
