The municipal market was unchanged to slightly weaker yesterday after stronger than expected economic data.
"We're a little weaker, just following Treasuries," a trader in New York said. "We had some data [yesterday] that was a bit stronger, so that's pushing Treasury yields higher. Munis are about two basis points weaker at this point."
Traders said, however, that most of the weakness is on the long end of the curve, while shorter maturities are seeing little movement.
"You just don't see any decisive place that the market is going," a short-end trader in Los Angeles said. "The primary deals are all going smoothly and getting taken care of, but you have yet to see a real impact on munis just yet."
The Treasury market showed losses yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.52%, finished at 3.57%. The yield on the two-year note was quoted near the end of the session at 1.83% after opening at 1.76%.
In economic data released yesterday, the producer price index rose 1.1% in March, after a 0.3% gain the previous month. Economists polled by IFR Markets had predicted a 0.5% uptick.
The core PPI climbed 0.2% in March, after a 0.5% increase the previous month. Economists polled by IFR had predicted 0.2% growth.
The Empire State Manufacturing Survey indicated that the general business conditions index rebounded from an all-time low of negative 22.23 in March to a positive 0.63 reading in April. The previous low for the index was negative 19.6 in November 2001. Economists surveyed by IFR Markets had expected the index would be negative 16.00.
In the new-issue market, Goldman, Sachs & Co. priced $608.8 million of airport system revenue bonds for Denver in two series. Bonds from a $221.2 million series of fixed-rate bonds subject to the alternative minimum tax mature from 2008 through 2017, with yields ranging from 3.50% with a 5% coupon in 2009 to 4.93% with a 5% coupon in 2017. Bonds maturing in 2008 were not formally re-offered. Bonds maturing in 2014 are insured by Financial Security Assurance Inc. The bonds are not callable.
Bonds from a $387.6 million series of term-rate bonds subject to the alternative minimum tax contain three maturities in 2032, with yields ranging from 4.30% with a 5% coupon to 4.65% with a 5.25% coupon. A total of $182 million of bonds in this series will be insured by FSA. All remaining bonds in both series will be uninsured. The underlying credit is rated A1 by Moody's Investors Service and A-plus by Standard & Poor's and Fitch Ratings.
Wisconsin competitively sold $164.5 million of general obligation bonds to Lehman Brothers at a true interest cost of 4.14%. The bonds mature from 2009 through 2028, with yields ranging from 2.27% with a 4% coupon in 2010 to 4.65% with a 4.6% coupon in 2028. Bonds maturing in 2009, 2015, 2016, and from 2025 through 2027, were not formally re-offered. The bonds, which are callable at par in 2018, are rated Aa3 by Moody's and AA-minus by Standard & Poor's and Fitch.
RBC Capital Markets priced $96.4 million of unlimited-tax bonds for the Friendswood Independent School District in Texas. The bonds mature from 2013 through 2028, with term bonds in 2032 and 2037. Yields range from 3.05% with a 4% coupon in 2013 to 4.66% with a 5% coupon in 2037. The bonds, which are callable at par in 2018, are insured by the state's triple-A Permanent School Fund guarantee program. The underlying credit is rated A1 by Moody's and A-plus by Standard & Poor's.
Morgan Stanley priced $90 million of revenue bonds for Florida's Jacksonville Port Authority, subject to the alternative minimum tax. The bonds mature in 2021, 2024, 2026, 2028, and 2038, with yields ranging from 5.08% with a 5.75% coupon in 2021 to 5.30% with a 6% coupon in 2038. The bonds are callable at par in 2017, except those bonds maturing in 2038, which are callable at par in 2012. The bonds are insured by Assured Guaranty Corp., and the underlying credit is rated A2 by Moody's and A by Standard & Poor's.
UBS Securities LLC priced $61.8 million of lease revenue bonds for the California State Public Works Board in four series. Bonds from a $26.6 million series mature from 2009 through 2028, with a term bond in 2033. Yields range from 2.15% with a 3% coupon in 2009 to 5.00% with a 4.75% coupon in 2033. Bonds from a $20.5 million series also mature from 2009 through 2028, with a term bond in 2033. Yields range from 2.15% with a 3% coupon in 2009 to 5.00% with a 4.75% coupon in 2033. Likewise, bonds from a $10.7 million series mature from 2009 through 2028, with a term bond in 2033.
Yields range from 2.15% with a 3% coupon in 2009 to 5.00% with a 4.75% coupon in 2033. In addition, bonds from a $4 million series mature from 2009 through 2028, with a term bond in 2033. Yields range from 2.15% with a 3% coupon in 2009 to 5.00% priced at par in 2033. All bonds are callable at par in 2018. The credit is rated A2 by Moody's and A by Standard & Poor's and Fitch.
Finally, the Virginia Public Building Authority competitively sold $59.9 million of public facilities revenue refunding bonds to Lehman Brothers with a TIC of 2.54%. The bonds mature from 2009 through 2012, with yields ranging from 2.20% in 2010 to 2.76% in 2012, all with 5% coupons. Bonds maturing in 2009 were not formally re-offered. The bonds, which are not callable, are rated Aa1 by Moody's and AA-plus by Standard & Poor's and Fitch.
