The municipal market was firmer yesterday, following Treasuries.
"We've been firmer all day, but we made a late push, just based on the uptick in Treasuries, and now I'd say we're better by a solid three basis points," a trader in Los Angeles said. "We might even be up four in some spots."
Trades reported by the Municipal Securities Rulemaking Board yesterday showed some gains. Bonds from an interdealer trade of California 5s of 2035 yielded 5.07%, one basis point lower than where they were sold Tuesday. Bonds from an interdealer trade of Arizona's Salt River Project Agricultural Improvement and Power District 5s of 2038 yielded 4.65%, down two basis points from where they traded Tuesday. A dealer bought from a customer insured Dormitory Authority of the State of New York 5s of 2038 at 4.78%, even with where they traded Tuesday. A dealer sold to a customer insured West Virginia Economic Development Authority 5s of 2029 at 5.08%, down one basis point from where they were sold Tuesday.
"We were quiet for most of the day, and better by roughly a basis point, but that late charge brought us up," a trader in New York added. "Now, at the end of the day, we're a good three or four basis points better, and most of that happened pretty much in the last hour here, after Treasuries spiked a bit."
The Treasury market showed gains yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.88%, finished at 3.82%. The yield on the two-year note was quoted near the end of the session at 2.39%, after opening at 2.47%.
The economic calendar was light yesterday.
Today, initial jobless claims for the week ended July 5 will be released, along with continuing jobless claims for the week ended June 28. And tomorrow, the preliminary University of Michigan consumer sentiment index for July will be released.
Economists polled by IFR Markets are predicting 399,000 initial jobless claims, 3.125 million continuing jobless claims, and a 56.0 Michigan sentiment index.
In the new-issue market yesterday, Washington competitively sold $752.5 million of general obligation bonds in two series. Bonds from a $492.5 million series of various-purpose GOs were sold to Merrill Lynch & Co. with a true interest cost of 4.56%. The bonds mature from 2014 through 2031, with a term bond in 2033. Yields range from 3.64% with a 5% coupon in 2016 to 4.28% with a 5% coupon in 2023. Bonds maturing in 2014, 2015, 2017, 2018, and from 2024 through 2033 were not formally re-offered.
Bonds from $260 million issue of motor vehicle fuel-tax GOs were sold to Lehman Brothers with a TIC of 4.51%. The bonds mature from 2009 through 2033, with yields ranging from 3.24% with a 5% coupon in 2013 to 4.67% with a 5% coupon in 2033. Bonds maturing from 2010 through 2012, and in 2017, 2018, and 2023 were not formally re-offered. The bonds, which are callable at par in 2018, are rated Aa1 by Moody's Investors Service, AA-plus by Standard & Poor's, and AA by Fitch Ratings.
The state also came to market with a $70.6 million competitive taxable GO sale. Citi won that deal with a TIC of 4.15%. The bonds mature from 2009 through 2014.
The Pennsylvania Higher Educational Facilities Authority competitively sold $138.9 million of revenue bonds to Wachovia Bank NA, with a TIC of 4.43%. The bonds mature from 2009 through 2028, with term bonds in 2030, 2033, and 2038. Bonds maturing in 2009 and 2010 will be decided via sealed bid. The bonds, which are callable at par in 2018, are rated Aa3 by Moody's and AA-minus by Fitch.
Citi priced $136.5 million of tax-exempt and taxable revenue bonds for the Northern California Power Agency in two series. Bonds from the tax-exempt $128 million series mature from 2010 through 2024, with yields ranging from 2.78% with a 4% coupon in 2010 to 4.48% with a 5% coupon in 2024. The bonds, which are callable at par in 2018, are insured by Assured Guaranty Corp., except for bonds maturing from 2010 through 2012, which are uninsured. The underlying credit is rated A2 by Moody's, A-minus by Standard & Poor's, and A by Fitch. The deal also contains an $8.5 million taxable component, which is also insured by Assured Guaranty.
The South Carolina Association of Governmental Organizations competitively sold $88.6 million of certificates of participation to Citi, with a net interest cost of 1.56%. The COPs mature in 2009, yielding 1.54% with a 3% coupon. The credit is rated MIG-1 by Moody's.
JPMorgan priced $86.9 million of revenue bonds for the Maryland Health and Higher Educational Facilities Authority. The bonds mature from 2009 through 2023, with yields ranging from 2.43% with a 4% coupon in 2009 to 4.95% with a 4.75% coupon in 2023. The bonds, which are callable at par in 2018, are rated A3 by Moody's, and A by both Standard & Poor's and Fitch.
Banc of America Securities LLC priced $76 million of revenue bonds for the South Dakota Building Authority. The bonds mature from 2009 through 2028, with a term bond in 2033. Yields range from 1.73% with a 4% coupon in 2009 to 4.90% with a 4.75% coupon in 2033. The bonds, which are callable at par in 2018, are insured by Financial Security Assurance Inc. The underlying credit is rated AA-minus by Standard & Poor's.
