The municipal market was weaker yesterday as another influx of large deals entered the market.
"The primary market is dominating," a trader in Chicago said. "Traders are taking a little pain trying to find their spots. But the technical side is still strong, with the June and July rollover. It's not something to panic about."
The Treasury market, however, showed gains yesterday. The yield on the benchmark 10-year Treasury note, which opened at 4.21%, finished at 4.14%. The yield on the two-year note was quoted near the end of the session at 2.86% after opening at 2.91%.
"The market seems to be inundated by supply, and it's difficult getting investors' attention," a trader in New Jersey said. "Spreads seem to be widening."
"There's not a ton going on," a trader in New York added. "We're probably a little bit weaker, but it's very quiet. People are focusing on the new issues."
In the new-issue market yesterday, Merrill Lynch & Co. priced $1.75 billion of senior-secured notes and bonds for Florida's Citizens Property Insurance Corp. in two series. The $1.25 billion Series A-2 note matures June 2009 with a yield of 3.5% on a 4.5% coupon. Insured by Financial Security Assurance Inc., the $250 million Series A-2 note matures June 2009, with a yield of 2.5% on a 4.5% coupon. The notes have underlying credit ratings of MIG-1 from Moody's Investors Service, and SP-1-plus from Standard & Poor's.
Bonds from the $250 million Series 2008A-1 mature 2011, with a 4.37% yield on a 5% coupon. The bonds have credit ratings of A2 from Moody's and A-plus from Standard & Poor's.
Morgan Stanley priced $616.3 million in revenue bonds for the Dormitory Authority of the State of New York, for the benefit of New York University, in multiple series, including one taxable series. Bonds from the $280.1 million, tax-exempt series A mature from 2014 through 2023, with term bonds in 2029, 2038 and 2048. Yields range from 3.46% with a 4% coupon in 2014 to 5.05% with a 5.25% coupon in 2048.
Bonds from the $225.9 million tax-exempt Series B mature from 2010 through 2023, with term bonds in 2029, 2038, and 2048. Yields range from 2.48% with a 3% coupon in 2010 to 5.05% with a 5.25% coupon in 2048. Bonds from the $99.1 million tax-exempt Series C mature from 2010 through 2023, with term bonds in 2029 and 2038. Yields range from 2.48% with a 3% coupon in 2010 to 4.88% with a 5% coupon in 2038. Bonds from the $13.2 million Series D mature from 2010 through 2014 and are federally taxable.
Bonds from tax-exempt series A, B, and C are callable at par in 2018. All the bonds are rated Aa3 by Moody's Investors Service and AA-minus from Standard & Poor's.
JPMorgan priced for retail investors $600 million in Prairie State Energy campus project revenue bonds for Ohio's American Municipal Power Inc. Bonds mature from 2013 through 2028, with term bonds in 2033, 2038, and 2043. Yields range from 3.69% on a 4% coupon in 2013 to 5.07% on a 5% coupon in 2038, with no retail orders for bonds maturing 2021, 2022, 2024 through 2027, 2033, and 2043. Bonds maturing from 2013 through 2020, 2023, 2028, and 2038 are insured by Assured Guaranty Corp. The bonds, which are callable at par in 2018, have underlying ratings of A1 from Moody's, A from Standard & Poor's, and A from Fitch Ratings.
Goldman, Sachs & Co. priced $453.9 million in service contract revenue refunding bonds for the New York State Urban Development Corp. Bonds mature from 2009 through 2030, with yields ranging from 1.78% on a 3% coupon in 2009 to 4.94% with a 4.875% coupon in 2030. The bonds, which are callable at par in 2018, have credit ratings of AA-minus from Standard & Poor's and A-plus from Fitch.
Citi priced $200 million in federally taxable general obligation bonds for the Oregon State Board of Higher Education. The bonds mature from 2011 through 2018, with term bonds in 2024 and 2038. The bonds have underlying credit ratings of Aa2 from Moody's, AA from Standard & Poor's, and AA from Fitch.
RBC Capital Markets priced $175 million in consolidated revenue and refunding bonds for the Board of Regents of the University of Houston System. Bonds mature from 2008 through 2028, with term bonds in 2033 and 2038. Yields range from 1.8% with a 5% coupon in 2008 to par on a 5% coupon in 2038. The bonds, which are callable at par in 2018, are insured by FSA, and have underlying credit ratings of Aa3 from Moody's and AA-minus from Standard & Poor's.
Raymond James & Associates Inc. priced $148.9 million in hospital revenue bonds for the West Virginia Hospital Finance Authority for the benefit of Thomas Health Systems Inc. Bonds mature from 2011 through 2015, with term bonds in 2020, 2023, 2028, 2038, and 2043. Yields range from 4.85% with a 5% coupon in 2011 to 6.77% with a 6.75% coupon in 2043. The bonds are callable at par in 2018.
Seattle competitively sold $139.8 million in limited-tax general obligation improvement and refunding bonds to Merrill Lynch at a true interest cost of 4.39%. Bonds mature from 2009 through 2028, with yields ranging from 3.27% on a 5% coupon in 2012 to 4.69% on a 5% coupon in 2028. Bonds maturing from 2009 through 2011, from 2016 through 2018, and from 2020 through 2026 were not re-offered. The bonds, which are callable at par in 2018, are rated Aa1 by Moody's, triple-A by Standard & Poor's, and AA-plus by Fitch.
Goldman Sachs priced $103.6 million in fixed-rate revenue refunding bonds for the Wisconsin Health and Educational Facilities Authority. Bonds mature from 2017 through 2024, with term bonds in 2028, 2033, and 2037. Yields range from 4.63% on a 4.5% coupon in 2017 to 5.36% on a 5% coupon in 2037. The bonds, which are callable at par in 2018, have underlying credit ratings of Aa3 from Moody's and AA-minus from Standard & Poor's.
Also, RBC priced $92 million in general obligation bonds for California's San Joaquin Delta Community College District. The bonds mature from 2009 through 2017, with yields ranging from 2% on a 3% coupon in 2009 to 3.79% on a 5% coupon in 2017. Additionally, the offering features capital appreciation bonds maturing from 2018 through 2032, which are callable at par in 2018. Bonds from 2011 through 2017 are insured by FSA. The underlying credit is rated Aa3 by Moody's, A-plus by Standard & Poor's and A-plus by Fitch.
