The municipal market was slightly weaker yesterday, following Treasuries.
"It's definitely a little softer. The Treasury market is off a bit, and we're pretty much just following along," a trader in New York said. "I'd say it's weaker by about two or three basis points overall, closer to three on the long end."
The Treasury market showed losses yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.80%, finished at 3.90%. The yield on the two-year note was quoted near the end of the session at 2.46%, after opening at 2.31%.
After a revised $51.5 billion of bonds were issued last month, according to data as of May 7 from Thomson Reuters, a fair amount of activity in the new-issue market continues this week.
In the new-issue market yesterday, Morgan Stanley priced $363.3 million of revenue bonds for Texas' Lower Colorado River Authority. Bonds from the larger $199.6 million series mature from 2009 through 2021, with term bonds in 2023, 2028, and 2037. Yields range from 2.86% with a 5% coupon in 2010 to 5.10% with a 5.75% coupon in 2037. Bonds maturing in 2009 will be decided via sealed bid. The bonds are callable at par in 2015. Bonds from the smaller $163.8 million series mature from 2011 through 2021, with term bonds in 2023, 2028, and 2035.
Yields range from 2.85% with a 5% coupon in 2011 to 4.79% with a 5% coupon in 2035. These bonds, which are callable at par in 2018, are insured by Berkshire Hathaway Assurance Corp. The underlying credit is rated A2 by Moody's Investors Service, A by Standard & Poor's, and A-plus by Fitch Ratings.
Merrill Lynch & Co. priced $111 million of single-family mortgage revenue bonds for the Pennsylvania Housing Finance Agency in two series. Bonds from a $94.3 million series, subject to the alternative minimum tax, mature from 2009 through 2018, with term bonds in 2023, 2028, and 2034. Yields range from 3.20% in 2009 to 5.50% in 2034, all priced at par. These bonds are callable at par in 2017. Bonds from a $16.7 million series mature from 2011 through 2017, with yields ranging from 3.10% in 2011 to 3.95% in 2017, all priced at par. The bonds are not callable. The credit is rated Aa2 by Moody's and AA-plus by Standard & Poor's.
Goldman, Sachs & Co. priced $88.8 million of revenue bonds for the Washington Health Care Facilities Authority. The bonds mature in 2031 and 2035, yielding 5.15% with a 5.375% coupon and 5.18% with a 5.5% coupon, respectively. The bonds, which are callable at par in 2018, are rated Aa3 by Moody's.
Triple-A rated Stamford, Conn., competitively sold $88 million of general obligation bonds to Citi with a true interest cost of 3.83%. The bonds mature from 2009 through 2028, with yields ranging from 2.70% with a 3.125% coupon in 2012 to 3.95% with a 4% coupon in 2022. Bonds maturing from 2009 through 2011, in 2016, and from 2023 through 2028 were not formally re-offered. The bonds are callable at par in 2018.
Aurora, Ill., competitively sold $85.5 million of GO bonds to Piper Jaffray & Co. with a TIC of 4.66%. The bonds mature from 2009 through 2029, with term bonds in 2033 and 2038. Yields range from 2.39% with a 3.5% coupon in 2009 to 4.35% with a 4.25% coupon in 2022. Bonds maturing in 2017, 2019, and from 2023 through 2038 were not formally re-offered. The bonds, which are callable at par in 2015, are rated AA-plus by Standard & Poor's.
Pima County, Ariz., competitively sold $75 million of sewer revenue bonds to Morgan Stanley, with a net interest cost of 4.08%. The bonds mature from 2009 through 2033, with yields ranging from 2.00% with a 5% coupon in 2009 to 4.25% with a 4.125% coupon in 2023. Bonds maturing in 2020 were not formally re-offered. The bonds, which are callable at par in 2018, are insured by Assured Guaranty Corp. The underlying credit is rated A1 by Moody's and A-plus by Standard & Poor's.
Morgan Stanley priced $74.1 million of fixed-rate revenue bonds for the Illinois Health Facilities Authority in multiple series. Bonds from a $6 million series mature in 2022, yielding 4.61% with a 5.25% coupon. Bonds from a second $6 million series mature in 2025, yielding 4.79% with a 5.25% coupon. Bonds from a third $6 million series mature in 2027, yielding 4.89% with a 5.25% coupon. Bonds from a $17 million series mature in 2032, yielding 5.08% with a 5.25% coupon. Bonds from a $27.7 million series mature from 2009 through 2019, with a term bond in 2024.
Yields range from 2.86% with a 5% coupon in 2010 to 4.74% with a 5.25% coupon in 2024. Bonds from a $6.2 million series mature in 2032, yielding 5.08% with a 5.25% coupon. And bonds from a $5.2 million series mature in 2033, yielding 5.09% with a 5.25% coupon. All the bonds, which are callable at par in 2018, are insured by Financial Security Assurance Inc. The underlying credit is rated A by Standard & Poor's.
In economic data released yesterday, the U.S. import price index was up 1.8% in April. IFR Markets had predicted a 1.7% increase for the imports index. The 1.8% increase in the index followed a revised 2.9% increase in import prices in March.
Retail sales dipped 0.2% in April, after a 0.1% increase the previous month. Economists polled by IFR had predicted a 0.1% decline. Excluding autos, retail sales rose 0.5%, after a revised 0.4% uptick the previous month. Economists polled by IFR had predicted a 0.3% gain.
Business inventories rose 0.1% to $1.465 billion following a downwardly revised 0.5% gain in February. IFR Markets had projected that business inventories would be up 0.5% in the month. Also, a 1.0% increase in overall business sales brought the category to $1.154 billion. The March figure followed a downwardly revised 1.0% increase in February, and compared to IFR's projected 1.0% increase.
