The municipal market was slightly firmer yesterday, following the strengthening Treasury market.
“I think we’re up about three basis points,” a trader in New York said. “We’re following Treasuries, but underperforming them. It’s pretty quiet.”
The Treasury market showed gains yesterday. The yield on the benchmark 10-year Treasury note, which opened at 4.04%, finished at 3.95%. The yield on the two-year note was quoted near the end of the session at 2.52% after opening at 2.63%. The yield on the 30-year Treasury finished at 4.57% after opening at 4.65%.
“Any gains you’re seeing in the muni market are just following the Treasury,” a trader in Los Angeles added. “Not a whole lot else going on out there on the Street. We’re probably better by two or three basis points.”
In the new-issue market yesterday, Morgan Stanley priced $350 million of student loan revenue bonds for the New Jersey Higher Education Student Assistance Authority, subject to the alternative minimum tax. The bonds mature in 2021 and 2030, yielding 5.875% and 6.125%, respectively, both priced at par. The bonds, which are callable at par in 2018, are insured by Assured Guaranty Corp. The underlying credit is rated A2 by Moody’s Investors Service and A by Standard & Poor’s.
First Southwest Co. priced $237.1 million of senior-lien revenue bonds for Texas’ North Harris County Regional Water Authority. The bonds mature from 2013 through 2028, with term bonds in 2033 and 2038. Yields range from 3.69% with a 4% coupon in 2013 to 5.53% with a 5.5% coupon in 2038. The bonds, which are callable at par in 2018, are rated A3 by Moody’s and A-plus by Standard & Poor’s.
Goldman, Sachs & Co. priced $195.5 million of economic development road revenue bonds for the Kentucky Turnpike Authority. The bonds mature from 2013 through 2028, with yields ranging from 3.28% with a 3.25% coupon in 2013 to 4.88% with a 5% coupon in 2028. The bonds, which are callable at par in 2018, are rated Aa3 by Moody’s, AA-plus by Standard & Poor’s, and AA-minus by Fitch Ratings.
Banc of America Securities LLC priced $123.5 million of insured mortgage revenue bonds for the Washington Health Care Facilities Authority. The bonds mature from 2011 through 2015, with term bonds in 2018, 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.
Wachovia Bank NA, priced $119 million of public facility corporation lease revenue bonds for the Austin Community College District. The bonds mature from 2010 through 2030, with a term bond in 2033. Yields range from 2.66% with a 5.25% coupon in 2010 to 5.25% priced at par in 2033. The bonds, which are callable at par in 2018, are rated Aa3 by Moody’s and AA-plus by Standard & Poor’s.
California’s Hayward Unified School District competitively sold $100 million of general obligation bonds to Citi with a true interest cost of 5.02%. The bonds mature in 2009, 2010, and from 2021 through 2029, with a term bond in 2033. Yields range from 4.40% with a 4.25% coupon in 2021 to 5.00% priced at par in 2033. Bonds maturing in 2009, 2010, and 2023 were not formally re-offered. The bonds, which are callable at par in 2016, are rated AA-minus by Standard & Poor’s.
Texas’ Burleson Independent School District competitively sold $82.6 million of unlimited-tax school building bonds to Depfa First Albany Securities LLC with a net interest cost of 5.07%. The bonds mature from 2010 through 2030, with term bonds in 2033 and 2038. Yields range from 2.36% with a 4% coupon in 2010 to 5.08% with a 5% coupon in 2038. Bonds maturing from 2025 through 2030 were not formally re-offered. The bonds, which are callable at par in 2018, are backed by the state’s triple-A Permanent School Fund guarantee program. The underlying credit is rated A2 by Moody’s and A by Fitch.
In economic data released yesterday, advance second quarter gross domestic product climbed to an annual rate of 1.9%, after a revised 0.9% the previous quarter. Economists polled by IFR Markets had predicted a 2.4% annual rate of growth.
Initial jobless claims for the week ended July 26 came in at 448,000, after a revised 404,000 the previous week. Economists polled by IFR Markets had predicted 398,000 initial jobless claims.
Continuing jobless claims for the week ended July 19 came in at 3.282 million, after a revised 3.097 million the previous week. Economists polled by IFR Markets had predicted 3.150 million continuing jobless claims.
The Chicago Purchasing Managers’ Business Barometer rose to 50.8 in July from 49.6 in June. Economists polled by IFR predicted a 49.0 reading for the indicator.
A slate of economic data will be released today. The July non-farm payroll data will highlight the day, including 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 are predicting a 72,000 decline in non-farm payrolls. They are also forecasting a 0.4% dip in construction spending, a 49.2 reading in the ISM index, and an unemployment rate of 5.6%.
