Market Post: Mass. School Building Notes Expected to Be Snapped Up

The largest deal of the week, $300 million of Massachusetts School Building Authority bond anticipation notes, is expected to be gobbled up by traders.

The notes are attractive because they provide short-term cash and because Massachusetts has a strong name, investors said.

"People are always looking for somewhere to park their cash, and these are high-grade notes," a trader on the west coast said.

The notes earned an SP1-plus from Standard & Poor's and a F1-plus from Fitch Ratings.

"That deal will be bought up quickly, especially since there is not much to look at this week, it will come at pretty tight spreads," a trader in the Midwest said.

The Federal Open Market Committee meeting minutes were released Wednesday, and showed the Federal Reserve's tapering will likely be completed in October, assuming economic conditions allow, rather than in December. There had been some question as to whether the Fed would end by cutting $15 billion in October or cut $10 billion in October and the final $5 billion in December.

"People are focusing more on the FOMC minutes after the jobs report, because a lot of economic strategists moved up their expectation of when rates will be raised [after the jobs report came out] to middle 2015 rather than later," a second trader on the west coast said prior to release of the minutes. "The minutes will be a tell-tale sign in regards to when rates are moving."

The employment situation report released last week showed nonfarm payrolls increased by 288,000 in June after a 224,000 gain the previous month.

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