'Exceptionally Quiet' Munis Largely Flat

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The municipal market was unchanged to slightly firmer yesterday.

Traders said tax-exempt yields were lower by as much as one or two basis points in spots, but largely flat.

"It seems to be exceptionally quiet," a trader in Los Angeles said. "We did a few trades in the morning, but towards the afternoon, it just got really quiet. It seems like the market was actually firmer all day, but we just don't have any follow-through in terms of sales. But I still think there's a decent feeling out there. It has a decent tone to it, and my guess is it'll probably be very quiet again [today], but on the firm side."

The Treasury market, however, showed losses . The yield on the benchmark 10-year Treasury note, which opened at 3.73%, finished at 3.76%. The yield on the two-year note was quoted near the end of the session at 2.37% after opening at 2.26%.

In the new-issue market yesterday, Citi priced $525 million of facility revenue bonds for Catholic Healthcare West in 11 series.

The deal was split between two issuers, with the California Statewide Communities Development Authority issuing Series A, B, C, D, and E, accounting for $226.3 million, and the California Health Facilities Finance Authority issuing Series G, H, I, J, K, and L, accounting for $298.7 million.

Bonds from the $48 million Series A mature in 2030, yielding 5.50%, priced at par. Bonds from the $32 million Series B mature in 2030, yielding 5.50%, priced at par. Bonds from the $40 million Series C mature in 2035, yielding 5.60%, priced at par. Bonds from the $63.7 million Series D mature in 2031, yielding 5.54% with a 5.625% coupon. Bonds from the $42.6 million Series E mature in 2031, yielding 5.54% with a 5.625% coupon. Bonds from the $29.7 million Series G mature in 2025, yielding 5.24% with a 5.5% coupon in 2025. Bonds from the $54.7 million Series H mature in 2022, yielding 5.125%, priced at par. Bonds from the $53.7 million Series I mature in 2022, yielding 5.125%, priced at par. Bonds from the $67.7 million Series J mature in 2032, yielding 5.55% with a 5.625% coupon. Bonds from the $54.1 million Sseries K mature in 2022, yielding 5.02% with a 5.5% coupon. And bonds from the $38.9 million Series L mature in 2022, yielding 5.02% with a 5.5% coupon.

Bonds from Series H, I, J, K, and L are callable at par in 2015. Bonds from Series B, D, and E are callable at par in 2017. And bonds from Series A, C, and G are callable at par in 2018. The credit is rated A2 by Moody's Investors Service, A by Standard & Poor's, and A-plus by Fitch Ratings.

Goldman, Sachs & Co. priced $560.2 million of water revenue certificates of participation for the San Diego County Water Authority. The bonds mature from 2012 through 2028, with term bonds in 2033 and 2038. Yields range from 2.98% with a 4% coupon in 2012 to 4.81% with a 5% coupon in 2038. The bonds, which are callable at par in 2018, are insured by Financial Security Assurance Inc. The underlying credit is rated Aa3 by Moody's, AA-plus by Standard & Poor's, and AA by Fitch.

Goldman Sachs also priced $286.5 million of revenue bonds for the Dormitory Authority of the State of New York to benefit Memorial Sloan-Kettering Cancer Center. The bonds mature from 2013 through 2019, with term bonds in 2024, 2025, and 2026. Yields range from 3.29% with a 4% coupon in 2013 to 4.58% with a 5% coupon in 2026. The bonds, which are callable at par in 2018, are rated Aa2 by Moody's and AA by Standard & Poor's and Fitch.

In economic data released yesterday, personal income rose 0.3% in March after a 0.5% increase the previous month. Economists polled by IFR Markets had predicted a 0.3% jump.

Personal consumption increased 0.4% in March after a 0.1% uptick the previous month. Economists polled by IFR had predicted a 0.3% gain.

The core personal consumption expenditures deflator rose 0.2 in March after a 0.1% increase in February. Economists polled by IFR had predicted a 0.2% rise.

Initial jobless claims for the week ended April 26 came in at 380,000 after a revised 345,000 the previous week. Economists polled by IFR had predicted 360,000 initial jobless claims.

Continuing jobless claims for the week ended April 19 came in at 3.019 million after a revised 2.945 million the prior week. Economists polled by IFR Markets had predicted 2.950 million continuing jobless claims.

The Institute for Supply Management's business activity composite index remained at 48.6 in April, unchanged from 48.6 in March. Economists polled by IFR predicted the index would slip to 48.0.

Spending on construction projects fell 1.1% to a seasonally adjusted annual rate of $1.124 trillion in March as private construction decreased 1.7%, and public construction grew 0.6%. The overall decrease, which was larger than the 0.9% decrease projected by IFR, followed a revised February increase of 0.4% to a level of $1.137 trillion.

More economic data will be released today, led by the April non-farm payrolls report. In addition to payrolls, March factory orders will be released. Economists polled by IFR are predicting a loss of 75,000 jobs, a 0.3% jump in factory orders, and a 2.0% increase in factory orders excluding transportation.

 

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