Munis Firmer; Treasuries Show Some Gains

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The municipal market was slightly firmer yesterday.

"It's been an interesting market," a trader in Los Angeles said. "What I think is happening is a lot of the new-issue stuff is getting digested, and that's where most trading desks' activities are. So those that don't have the new issues are trying to get the customer's attention, and the customers are just too busy with new issues. It's hard to get buyers' attention because they've got so many things coming their way."

"It's a little bit firmer, maybe a basis point. I would say that, in spots, it could be better than that," the trader said. "But in other spots, you can't get their attention. There were segments of it that were firm, and there were segments of it that were not as firm."

The Treasury market showed some gains yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.59%, finished at 3.58%. The yield on the two-year note was quoted near the end of the session at 1.89%, after opening at 1.90%.

In economic data released yesterday, initial jobless claims for the week ended March 29 came in at 407,000, after a revised 369,000 the previous week. Economists polled by IFR Markets had predicted 366,000 initial jobless claims.

Continuing jobless claims for the week ended March 22 came in at 2.937 million, after a revised 2.840 million the prior week. Economists polled by IFR had predicted 2.860 million continuing jobless claims.

The Institute for Supply Management's non-manufacturing business activity composite index was 49.6 in March, up from 49.3 in February, on a seasonally adjusted basis, the group said yesterday.

Economists polled by IFR had expected a 49.0 level.

Today, March nonfarm payrolls report will be released. Economists polled by IFR Markets are predicting that 50,000 jobs were lost in March.

In the new-issue market yesterday, Portland, Ore., competitively sold $554.1 million of sewer system revenue and refunding bonds in two series. The larger series, $339.9 million of first-lien bonds, was sold to Lehman Brothers, with a true interest cost of 4.37%. Pricing information was not yet available. The bonds will mature from 2009 through 2033. The smaller series, $214.2 million of second-lien bonds, was sold to Citi, with a TIC of 4.61%. The bonds mature from 2009 through 2026, with term bonds in 2028, 2030, and 2033.

Yields range from 2.00% with a 5% coupon in 2009 to 4.87% with a 5% coupon in 2030. Bonds maturing in 2028 and 2033 were not formally re-offered. Bonds maturing from 2009 through 2023 are insured by Financial Security Assurance, Inc. All bonds are callable at par in 2018. The underlying credit on the first-lien bonds is rated Aa3 by Moody's and AA-minus by Standard & Poor's. The underlying credit on the second-lien bonds is rated A1 by Moody's Investors Service and AA-minus by Standard & Poor's.

Portland last sold sewer system revenue refunding bonds in February 2007. Citi won that $205 million deal of first-lien bonds at a true interest cost of 3.72%. The bonds mature from 2007 through 2015, yielding 3.60% in 2011 and 3.62% in 2012, both with 5% coupons. The remainder of the debt was not formally reoffered. Bonds maturing from 2011 through 2015 are insured by MBIA Insurance Corp.

Bonds maturing in 2012 were widest to that day's Municipal Market Data triple-A yield curve, with yields eight basis points over the curve. Bonds maturing in 2011 were tightest to the scale, with yields six basis points over.

Nevada competitively sold $132 million of highway improvement revenue bonds to BB&T Capital Markets, with a TIC of 4.35%. The bonds mature from 2011 through 2025, with yields ranging from 2.64% with a 5% coupon in 2011 to 4.63% with a 5% coupon in 2024. Bonds maturing in 2018, 2021, 2023, and 2025 were not formally reoffered. Bonds maturing in 2021, 2023, and 2025 are insured byFSA. The bonds are callable at par in 2018. The underlying credit is rated Aa3 by Moody's, AA-plus by Standard & Poor's, and AA by Fitch.

Lehman Brothers priced $122.3 million of general revenue bonds for the Western Michigan University Board of Trustees. The bonds mature from 2009 through 2023, with term bonds in 2028 and 2032. Yields range from 2.20% with a 5% coupon in 2009 to 5.06% with a 5% coupon in 2032. The bonds, which are callable at par in 2018, are insured by FSA. The underlying credit is rated A2 by Moody's and A-plus by Standard & Poor's.

Anne Arundel County, Md., competitively sold $87.2 million of consolidated bonds to UBS Securities LLC with a TIC of 4.23%. The bonds mature from 2009 through 2030, with term bonds in 2033 and 2036. Yields range from 2.55% with a 3.5% coupon in 2011 to 4.87% with a 4.7% coupon in 2036. Bonds maturing in 2009, 2010, 2013, 2018, 2019, and from 2025 through 2028 were not formally re-offered. The bonds, which are callable at par in 2018, are rated Aa1 by Moody's, AAA by Standard & Poor's, and AA-plus by Fitch.

Finally, the Johnson County, Kan., Public Building Commission competitively sold $48.8 million of lease purchase revenue bonds to Morgan Keegan & Co., with a TIC of 4.53%. The bonds mature from 2009 through 2026, with a term bond in 2028. Yields range from 2.03% with a 4% coupon in 2009 to 4.43% with a 4.375% coupon in 2021. Bonds maturing in 2010, 2011, from 2015 through 2018, in 2020, and from 2022 through 2028 were not formally re-offered. The bonds, which are callable at par in 2018, are rated triple-A by both Moody's and Standard & Poor's.

 

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