The municipal market was firmer yesterday, following Treasuries.
"The Treasury market is seeing a nice little rally, and it's trickling down to munis a bit," a trader in New York said. "We're better by maybe two or three basis points, just based on what's going on with Treasuries."
Trades reported by the Municipal Securities Rulemaking Board showed gains yesterday. A dealer sold to a customer New Jersey Educational Facilities Authority 4.5s of 2037 at 4.59%, down two basis points from where they were sold Wednesday. A dealer sold to a customer New York's Liberty Development Corp. 5.25s of 2035 at 4.96%, three basis points lower than where they traded Wednesday. A dealer sold to a customer insured Alaska Housing Finance Corp. 5s of 2029 at 4.78%, down two basis points from where they were sold Wednesday.
"We started off pretty firm in the morning, and I think we got a little firmer as the day wore on," a trader in Los Angeles said. "I've seen it better by as much as four or five basis points in certain spots, though I'd say two or three overall."
The Treasury market showed gains yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.88%, finished at 3.80%. The yield on the two-year note was quoted near the end of the session at 2.24%, after opening at 2.31%.
In economic data released yesterday, initial jobless claims for the week ended May 3 came in at 365,000, after a revised 383,000 the previous week. Economists polled by IFR Markets had predicted 370,000 initial jobless claims.
Continuing jobless claims for the week ended April 26 came in at 3.020 million after a revised 3.030 million the prior week. Economists polled by IFR had predicted 3.000 million continuing jobless claims.
Merchant wholesalers posted a 0.1% decrease in inventories in March, while sales jumped 1.6% in the month. Inventories of merchant wholesalers slid to $420.8 billion, following a downwardly revised 0.9% increase to $421.1 billion in February. Meanwhile, sales of merchant wholesalers rose to about $384.3 billion, following February's revised 0.5% decrease to $378.2 billion. Economists polled by IFR predicted a 0.5% increase in wholesale inventories, and 0.7% growth in wholesale sales.
In the new-issue market yesterday, the New Jersey Turnpike Authority competitively sold $335 million of subordinated turnpike revenue bond anticipation notes in two series. It competitively sold a $175 million series to Goldman, Sachs & Co. with a net interest cost of 1.87%. The Bans mature in Feb. 2009, yielding 1.86% with a 3% coupon. The authority also competitively sold a $160 million series to various bidders. Wachovia Bank NA took the largest share of the deal, worth $50 million, with a NIC of 1.85%. The Bans mature in May 2009, yielding 1.83% with a 3% coupon in 2009.
Morgan Stanley priced $234.1 million of general revenue pledge bonds for the the University of Virginia. The bonds mature in 2040, yielding 4.62% with a 5% coupon. The bonds, which are callable at par in 2018, are rated triple-A by all three major ratings agencies.
Merrill Lynch & Co. priced $212.3 million of electric revenue bonds for Riverside, Calif. The bonds mature from 2017 through 2028, with term bonds in 2033 and 2038. Yields range from 3.74% with a 3.625% coupon in 2017 to 4.76% 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 AA-minus by both Standard & Poor's and Fitch Ratings.
Citi priced $163.2 million of variable-rate hospital revenue bonds for the Vermont Educational and Health Buildings Financing Agency. The bonds mature from 2008 through 2019, with term bonds in 2022, 2028, and 2034. Yields range from 2.20% with a 3% coupon in 2008 to 5.13% with a 5% coupon in 2034. The bonds, which are callable at par in 2018, are insured by FSA. The underlying credit is rated Baa1 by Moody's Investors Service, BBB by Standard & Poor's, and BBB-plus by Fitch.
Also the Carrollton-Farmers Branch Independent School District in Texas competitively sold $57.4 million of unlimited-tax school building and refunding bonds to Merrill with a true interest cost of 4.12%. The bonds mature from 2009 through 2033, with yields ranging from 3.27% with a 4% coupon in 2014 to 3.72% with a 4% coupon in 2017. Bonds maturing from 2009 through 2013, in 2015 and 2016, and from 2018 through 2033 were not formally re-offered. The bonds, which are callable at par in 2018, are backed by the Permanent School Fund guarantee program. The underlying credit is rated Aa2 by Moody's and AA by Standard & Poor's.
