The municipal market was unchanged to slightly weaker yesterday, following losses in Treasuries.
Traders said tax-exempt yields were largely unchanged on the short end and in the intermediate range, and about two or three basis points weaker on the long end.
"There's less activity today than there's been in the past couple of sessions, but there's some weakness out there," a trader in New York said. "It's mostly concentrated on the long end, that's where you're seeing some activity right now. But the market is fairly quiet on the whole."
"It's been a fairly quiet day," a trader in Los Angeles said. "We're getting close to the end of the week here, and people are kind of doing only what they need to do. There's some weakness out long, but not a whole lot otherwise."
The Treasury market showed some losses yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.86%, finished at 3.94%. The yield on the two-year note was quoted near the end of the session at 1.58% after opening at 1.53%. The yield on the 30-year bond, which opened at 4.23%, was quoted near the end of the session at 4.29%.
In the new-issue market yesterday, Banc of America Securities LLC priced $225 million of second series revenue notes for San Francisco. The notes contain four maturities in May 2019, which yield 6.00% with a 5.5% coupon, 6.00% with a 6.5% coupon, 6.20% with a 6.75% coupon, and 6.45% with a 6.5% coupon. The notes, which are subject to the alternative minimum tax, are rated A1 by Moody's Investors Service and A by Standard & Poor's and Fitch Ratings.
Sonoma County, Calif., competitively sold $115 million of tax and revenue anticipation notes to Morgan Stanley with a true interest cost of 1.34%. The notes mature in October 2009, yielding 3.00%, priced at par. The credit is rated SP-1-plus by Standard & Poor's.
Merrill Lynch & Co. priced $18.3 million of revenue bonds for the Adams County, Pa., Industrial Development Authority. The bonds mature in 2016 and 2021, yielding 5.30% with a 5.25% coupon and 5.87% with a 5.875% coupon, respectively. The bonds, which are callable at par in 2013, are rated A2 by Moody's and A-minus by Standard & Poor's.
On Wednesday, Merrill priced for both retail and institutional investors $400 million of bonds for the New York City Transitional Finance Authority. The deal was originally set to price for institutional investors yesterday, while Wednesday was earmarked for a retail order period. Further information on the sale was not yet available. The bonds were slated to mature from 2010 through 2028, with term bonds in 2031, 2035, and 2038. The bonds are rated A1 by Moody's, AA-minus by Standard & Poor's, and A-plus by Fitch.
Goldman, Sachs & Co. released its final pricing for $149.3 million of electric system revenue bonds for New York's Long Island Power Authority. The deal was originally priced at $309.2 million on Tuesday, but was downsized. Yields were selectively raised by 10 to 19 basis points prior to final pricing, and the deal came uninsured. The credit is rated A3 by Moody's and A-minus by Standard & Poor's and Fitch.
Trades reported by the Municipal Securities Rulemaking Board yesterday showed some gains, in fairly light activity. A dealer sold to a customer Honolulu 5s of 2029 at 5.30%, up two basis points from where they were sold Wednesday. A dealer bought from a customer New Jersey Educational Facilities Authority 5.375s of 2038 at 5.54%, two basis points higher than where they traded Wednesday. A dealer sold to a customer New York City 5.25s of 2024 at 5.52%, one basis point higher than where they traded Wednesday. Bonds from an interdealer trade of Massachusetts 5.75s of 2010 yielded 2.90%, even with where they were sold Wednesday.
This follows Wednesday, which saw the highest amount of secondary market trading in a week when 52,830 trades were conducted, according to the MSRB. It was the highest number of trades since 56,641 on Oct. 21, and the second time trades exceeded 50,000 since then. Prior to that, more than 50,000 trades were conducted in six straight sessions, after a bit of a drop-off the pevious month due to the credit crisis.
In economic data released yesterday, advanced third-quarter gross domestic product dropped 0.3%, after a 2.8% rise the previous reading. Economists polled by Thomson Reuters had forecast a 0.5% decline.
Initial jobless claims for the week ended Oct. 25 came in at 479,000, after a revised 479,000 the previous week. Economists polled by Thomson had predicted 475,000 initial jobless claims.
Continuing jobless claims for the week ended Oct. 18 came in at 3.715 million following a revised 3.727 million the week before. Economists polled by Thomson had predicted 3.740 million continuing jobless claims.
