The municipal market was slightly weaker yesterday, following Treasuries. Traders said tax-exempt yields were higher by two or three basis points.
"We're seeing bonds cheapen up a bit, just based on what Treasuries are doing," a trader in New York said. "We were only off maybe one or two basis points earlier on, but now I'd say it's a solid three."
The Treasury market showed losses yesterday. The yield on the benchmark 10-year Treasury note, which opened at 4.00%, finished at 4.05%. The yield on the two-year note was quoted near the end of the session at 2.63% after opening at 2.57%. The yield on the 30-year Treasury bond finished at 4.63% after opening at 4.60%.
In economic data released yesterday, the consumer confidence index increased in July, rising to 51.9 from an upwardly revised 51.0 last month. The June index reading was originally reported as 50.4. Economists polled by IFR Markets predicted the index would fall to 50.0.
A slate of economic data will be released over the next couple of days. Tomorrow, second-quarter gross domestic product data will be released, along with the second-quarter core PCE price index, initial jobless claims for the week of July 26, continuing jobless claims for the week of July 19, and the Chicago purchasing managers index. On Friday, July non-farm payroll data highlights the day, with July unemployment data and average hourly earnings, while June construction spending and the July Institute for Supply Management business activity composite index will also be released.
Economists polled by IFR Markets are predicting a 72,000 decline in non-farm payrolls. They are also forecasting a 2.4% annual growth rate for GDP, 398,000 initial jobless claims, 3.150 million continuing jobless claims, a 49.0 Chicago PMI reading, a 0.4% dip in construction spending, a 49.2 reading in the ISM index, and an unemployment rate of 5.6%.
In the new-issue market yesterday, Morgan Stanley priced $221.4 million of health care facilities revenue refunding bonds for St. Louis Park, Minn. The bonds mature from 2009 through 2018, with term bonds in 2023, 2026, and 2030. Yields range from 2.85% with a 5.5% coupon in 2009 to 5.92% with a 5.75% coupon in 2030. The bonds, which are callable at par in 2018, are rated A by Standard & Poor's.
Washington's Snohomish School District No. 201 competitively sold $103.1 million of unlimited-tax general obligation bonds to JPMorgan with a true interest cost of 4.73%. The bonds mature from 2009 through 2027, with yields ranging from 2.10% with a 4% coupon in 2009 to 4.56% with a 5.25% coupon in 2024. Bonds maturing from 2025 through 2027 were not formally re-offered. The bonds, which are callable at par in 2018, are rated Aa1 by Moody's Investors Service and AA-plus by Standard & Poor's.
Banc of America Securities LLC priced $123.5 million of mortgage revenue bonds for the Washington Health Care Facilities Authority. The bonds mature from 2011 through 2018, with term bonds in 2023, 2028, and 2036. Yields range from 3.38% with a 4% coupon in 2011 to 5.92% with a 6.25% coupon in 2036. The bonds, which are callable at par in 2018, are rated AA by Standard & Poor's.
Portland, Ore., competitively sold $79.1 million of first-lien water system revenue bonds for Goldman, Sachs & Co. with a TIC of 4.57%. The bonds mature from 2009 through 2033, with yields ranging from 2.96% with a 4% coupon in 2012 to 4.63% with a 4.75% coupon in 2025. Bonds maturing from 2009 through 2011 will be decided via sealed bid. Bonds maturing in 2013, 2015, 2017, and from 2026 through 2033 were not formally re-offered. The bonds, which are callable at par in 2018, are rated Aa1 by Moody's.
Merrill Lynch & Co. priced $65.8 million of revenue bonds for the California Statewide Communities Development Authority. The bonds mature from 2009 through 2020, with a term bond in 2023. Yields range from 2.88% with a 5% coupon in 2009 to 5.66% with a 5.5% coupon in 2023. The bonds, which are callable at par in 2018, are rated A-plus by Standard & Poor's.
Siebert Brandford Shank & Co. priced $36.9 million of capital facilities bonds new-money and refunding bonds for Ohio in two series. Bonds from the $30 million new-money series mature from 2009 through 2018, with yields ranging from 1.65% with a 3.5% coupon in 2009 to 4.08% with a 4% coupon in 2018. Bonds from the $6.9 million refunding series mature from 2009 through 2011, yielding 1.65%, 2.39%, and 2.86%, respectively, all priced at par. None of the bonds are callable. The credit is rated Aa2 by Moody's, and AA by both Standard & Poor's and Fitch Ratings.
Baltimore County, Md., competitively sold $36.7 million of certificates of participation to RBC Capital Markets with a TIC of 3.61%. The bonds mature from 2009 through 2018, with yields ranging from 2.75% with a 3.25% coupon in 2011 to 3.90% with a 5% coupon in 2018. The bonds, which are not callable, are rated Aa1 by Moody's and AA-plus by both Standard & Poor's and Fitch.
The Pennsylvania Higher Educational Facilities Authority competitively sold $31.1 million of refunding revenue bonds to Robert W. Baird & Co. with a TIC of 4.15%. The bonds mature from 2009 through 2025. None of the bonds were formally re-offered. The bonds, which are callable at par in 2018, are rated Aa3 by Moody's and AA-minus by Fitch.
Finally, Alexandria, La., competitively sold $25 million of sales tax bonds to Morgan Keegan & Co., with a TIC of 4.62%. The bonds mature from 2009 through 2028, with yields ranging from 2.00% with a 4% coupon in 2009 to 4.84% with a 4.75% coupon in 2025. Bonds maturing from 2026 through 2028 were not formally re-offered. The bonds, which are callable at 102 in 2018, declining to par in 2020, are rated AA-minus by Standard & Poor's.
