Munis Unchanged to Slightly Weaker

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The municipal market was unchanged to slightly weaker yesterday.

"We started off weaker, but Treasuries turned around, and we lost that weaker tone," a trader in Los Angeles said. "We're probably unchanged overall, but now there's actually a firmer tone. We could even be up a basis point in some spots."

The Treasury market showed gains yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.92%, finished at 3.86%. The yield on the two-year note was quoted near the end of the session at 2.33% after opening at 2.38%.

In the new-issue market yesterday, Morgan Stanley priced $431 million of tax-exempt and taxable electric revenue bonds for North Carolina Municipal Power Agency No. 1 in three series. Bonds from the tax-exempt $352.3 million Series A mature in 2009, and from 2013 through 2020, with yields ranging from 3.70% with a 5.25% coupon in 2013 to 4.57% with a 5.25% coupon in 2020. Bonds maturing in 2009 were decided via sealed bid. The bonds will be callable at par in 2018. Bonds from the tax-exempt $73.3 million Series C mature from 2009 through 2020, with yields ranging from 2.98% with a 4% coupon in 2010 to 4.57% with a 5.25% coupon in 2020. Bonds maturing in 2009 were decided via sealed bid. The bonds will be callable at par in 2018. The deal also contains a $5.3 million taxable Series B, which matures in 2013. The bonds are rated A2 by Moody's Investors Service, A-minus by Standard & Poor's, and A by Fitch Ratings.

Citi priced $429 million of general obligation bonds for Hawaii in three series. Bonds from a $375 million series mature from 2012 through 2028, with yields ranging from 3.06% with a 3% coupon in 2012 to 4.57% with a 5% coupon in 2028. The bonds are callable at par in 2028. Bonds from a $29 million series mature from 2012 through 2018, with yields ranging from 3.06% with a 3% coupon in 2012 to 3.87% with a 5% coupon in 2018. These bonds are not callable. The deal also contains a $25 million taxable series, which matures from 2009 through 2014.

The Port Authority of New York and New Jersey competitively sold $400 million of consolidated bonds to Citi with a true interest cost of 5.40%. The bonds, which are subject to the alternative minimum tax, mature from 2018 through 2026, with term bonds in 2028, 2030, 2035, and 2038. None of the bonds were formally re-offered. The bonds are callable at par in 2018, and are rated Aa3 by Moody's and AA-minus by Standard & Poor's and Fitch.

Lehman Brothers priced $203.9 million of senior sales tax revenue notes for the San Joaquin County, Calif., Transportation Authority. The bonds contain three maturities in 2011, all yielding 3.18%, with coupons of 3.125%, 4%, and 5%. The notes, which are not callable, are rated SP-1-plus by Standard & Poor's.

Goldman, Sachs & Co. priced $174.1 million of revenue bonds for the California Educational Facilities Authority. The bonds contain two maturities in 2014, both yielding 3.15%, with coupons of 4% and 5%. The bonds, which are not callable, are rated triple-A by all three major ratings agencies.

Banc of America Securities LLC priced $114.9 million of refunding lease revenue bonds for the Santa Clara, Calif., Financing Authority. The bonds mature from 2009 through 2023, with term bonds in 2028 and 2036. Yields range from 2.00% with a 3% coupon in 2009 to 4.90% with a 5.25% coupon in 2036. The bonds, which are callable at par in 2018, are rated Aa3 by Moody's and AA by Standard & Poor's.

Mesa, Ariz., competitively sold $52.9 million of utility systems revenue bonds to Prager Sealy & Co. The bonds mature from 2023 through 2032, with yields ranging from 4.36% with a 5.25% coupon in 2023 to 4.85% with a 4.875% coupon in 2032. The bonds, which are callable at par in 2018, are insured by Financial Security Assurance Inc. The underlying credit is rated A1 by Moody's and AA-minus by Standard & Poor's.

In economic data released yesterday, preliminary first-quarter non-farm productivity rose to an annual rate of 2.2%, after a revised 1.8% annual rate the previous reading. Economists polled by IFR Markets had predicted an annual rate of 1.7%.

Preliminary first quarter unit labor costs came in at 2.2%, after a revised 2.8% the previous reading. Economists polled by IFR had predicted a 2.6% level.

Also, pending home sales declined to a reading of 83.0 in March from a downwardly revised 83.8 in February. IFR' poll of economists had predicted an 83.8 reading.

More economic data will be released today. Initial jobless claims for the week ended May 3, continuing jobless claims for the week ended April 26, and with March wholesale inventories and sales are all slated for release.

Economists polled by IFR Markets are predicting 370,000 initial jobless claims, 3.000 million continuing jobless claims, a 0.5% rise in wholesale inventories, and a 0.7% gain in wholesale sales.

 

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