The municipal market was slightly firmer yesterday, as several of the week's largest scheduled transactions priced in the primary market.Siebert, Brandford, Shank & Co. priced $830 million of Build America Bonds for Dallas Area Rapid Transit. The deal contains a series of 30-year BABs that were priced to yield 175 basis points over the comparable Treasury yield and a series of 40-year BABs priced to yield 150 basis points over the comparable Treasury yield, according to market sources. Further pricing information on the sale was not available by press time. The credit is rated Aa3 by Moody's Investors Service and AAA by Standard & Poor's.
JPMorgan priced $750 million of revenue bonds for Atlanta, upsized from $600 million during the repricing. The bonds mature from 2010 through 2029, with term bonds in 2034 and 2039. Yields range from 3.15% with a 4% coupon in 2011 to 6.38% with a 6.25% coupon in 2039. Bonds maturing in 2010 were decided via sealed bid. The bonds, which are callable at par in 2019, are rated Baa1 by Moody's, A by Standard & Poor's, and BBB-plus by Fitch Ratings.
In the secondary market, traders said tax-exempt yields were lower by one or two basis points.
"We're doing better. It's marginal, but there is a better feeling, which is the main thing that I look for," a trader in Los Angeles said. "I kind of thought coming into this week, you've got the 30-year Treasury auction out of the way and that's feeling better right away, you've got the size of the national calendar is very large, but a lot of it that's going to get done will get done as BABs."
"So a consequence of that is that the tax-exempt portion seems to be following the script of being fairly close to the MMD, at least in terms of what the high-grades are doing," the trader said. "So the high-grades have actually been trading very well. But there haven't been a lot of high-grades, and there are not a lot of high-grades set to come the next two weeks."
The Treasury market showed gains yesterday. The yield on the benchmark 10-year note, which opened at 3.71%, was quoted near the end of the session at 3.66%. The yield on the two-year note was quoted near the end of the session at 1.18% after opening at 1.22%. The yield on the 30-year bond, which opened at 4.56%, was quoted near the end of the session at 4.47%.
As of Monday's close, the triple-A muni scale in 10 years was at 89.1% of comparable Treasuries, according to Municipal Market Data. Additionally, 30-year munis were 101.9% of comparable Treasuries. Also, as of the close Monday, 30-year tax-exempt triple-A rated general obligation bonds were at 110.0% of the comparable London Interbank Offered Rate.
Elsewhere in the new-issue market yesterday, JPMorgan priced $328.5 million of revenue bonds for the San Diego Public Facilities Financing Authority. The bonds mature from 2010 through 2029, with term bonds in 2034, 2035, and 2039. Yields range from 2.24% with a 3% coupon in 2012 to 5.55% with a 5.5% coupon in 2039. The bonds, which are callable at par in 2019, are rated A1 by Moody's and AA-minus by both Standard & Poor's and Fitch.
Ramirez & Co. priced $244.2 million of revenue bonds for Connecticut in two series. Bonds from the $199.7 million Series A mature from 2010 through 2027, with yields ranging from 1.10% with a 2% coupon in 2011 to 4.375% priced at par in 2027. Bonds maturing in 2010 will be decided via sealed bid. The bonds are callable at par in 2019. Bonds from the $44.4 million Series B mature from 2010 through 2015, with yields ranging from 1.10% with a 3% coupon in 2011 to 2.66% with a 4.25% coupon in 2015. Bonds maturing in 2010 will be decided via sealed bid. The bonds are not callable, and the credit is rated triple-A by all three rating agencies.
Barclays Capital priced $122.8 million of single-family mortgage revenue bonds for the Michigan State Housing Development Authority in three series. Bonds from the $75.6 million Series A mature from 2012 through 2016, with term bonds in 2019 and 2022. Yields range from 3.60% in 2012 to 5.35% in 2022, all priced at par. The bonds are callable at par in 2019.
Bonds from the $27.7 million Series B mature from 2010 through 2012, yielding from 2.50% in 2010 to 3.60% in 2012, all priced at par. The bonds are not callable. And bonds from the $19.5 million Series C mature in 2009 and contain a split maturity in 2010, yielding 2.65% in 2009 and 3.05% and 3.15% in 2010, all priced at par. These bonds are not callable. The credit is rated Aa2 by Moody's and AA-plus by Standard & Poor's.
In economic data released yesterday, housing starts climbed to 532,000 in May after a revised 454,000 in April. Economists polled by Thomson Reuters had predicted a 490,000 level. Building permits rose to 518,000 in May, after a 498,000 rate the previous month. Economists polled by Thomson had predicted a 500,000 level.
The producer price index rose 0.2% in May after a 0.3% climb in April. Economists polled by Thomson Reuters had predicted a 0.6% increase. The PPI core fell 0.1% in May after a 0.1% climb the previous month. Economists polled by Thomson had predicted a 0.1% increase.
