Munis Quiet in Light to Moderate Activity

The municipal market was quiet and largely unchanged yesterday, in light to moderate activity."It's pretty quiet," a trader in New York said. "We're really getting deep into summer now, and the doldrums that come with it. There's very little movement, very little activity. We're just flat."

"There isn't much activity in the market," a trader in Los Angeles said. "We're relatively unchanged, and there just isn't a whole lot of trading. It's a slow time in the muni market, and I think we'll remain relatively slow on through Labor Day. It's typically what happens in this market, and this year is no exception, to this point."

Trades reported by the Municipal Securities Rulemaking Board yesterday showed little movement. A dealer sold to a customer Metropolitan Water District of Southern California 6.54s of 2039 at 6.25%, even with where they traded Monday. A dealer bought from a customer New York Metropolitan Transportation Authority 5s of 2034 at 5.13%, even with where they were sold Monday.

A dealer sold to a customer Arizona's Salt River Project Agricultural Improvement & Power District 5s of 2038 at 5.07%, even with where they traded Monday. Bonds from an interdealer trade of taxable Illinois 5.1s of 2033 yielded 6.30%, even with where they were sold Monday.

Bonds from an interdealer trade of insured New York City Municipal Water Finance Authority 5s of 2028 yielded 4.41%, even with where they traded Monday. A dealer bought from a customer insured Ohio's Dublin City School District 5s of 2029 at 5.14%, even with where they traded Monday. Bonds from an interdealer trade of California 5s of 2037 yielded 5.60%, even with where they were sold Monday. Bonds from an interdealer trade of insured Iowa Finance Authority 5.25s of 2029 yielded 5.38%, even with where they traded Monday.

The Treasury market showed losses yesterday. The yield on the benchmark 10-year note, which opened at 3.63%, was quoted near the end of the session at 3.68%. The yield on the two-year note was quoted near the end of the session at 1.21% after opening at 1.18%. The yield on the 30-year bond, which opened at 4.40%, was quoted near the end of the session at 4.46%.

As of Monday's close, the triple-A muni scale in 10 years was at 82.1% of comparable Treasuries, according to Municipal Market Data. Additionally, 30-year munis were 105.9% of comparable Treasuries. As of Monday's close, 30-year tax-exempt triple-A general obligation bonds were at 108.8% of the comparable London Interbank Offered Rate.

In economic data released yesterday, personal income fell 1.3% in June, after a revised 1.3% rise the previous month. Economists polled by Thomson Reuters had predicted a 1.0% decline.

Personal consumption rose 0.4% in June, after a revised 0.1% uptick the previous month. Economists polled by Thomson Reuters had predicted a 0.3% gain.

The core personal consumption expenditures deflator climbed 0.2% in June, after a 0.1% rise the previous month. Economists polled by Thomson had predicted a 0.2% gain.

In the new-issue market yesterday, Barclays Capital priced $305.8 million of lease revenue bonds for Washington's FYI Properties. The bonds mature from 2012 through 2029, with term bonds in 2034 and 2039.

Yields range from 2.00% with a 4% coupon in 2012 to 5.74% with a 5.5% coupon in 2039. The bonds, which are callable at par in 2019, are rated AA by Standard & Poor's.

Siebert Brandford Shank & Co. priced $282.6 million of bonds for the Bexar County, Tex., Hospital District, including $246.4 million of taxable Build America Bonds. The large BAB component consists of bonds maturing from 2018 through 2023, with term bonds in 2028 and 2039. Yields range from 5.27% in 2018, or 3.42% after the 35% federal subsidy, to 6.90% in 2039, or 4.49% after the subsidy, all priced at par.

The bonds were priced to yield between 155 and 240 basis points over the comparable U.S. Treasury yields. The bonds, which are callable at par in 2019, are rated Aa2 by Moody's Investors Service and AA-plus by both Standard & Poor's and Fitch Ratings.

The deal also contained a $36.2 million tax-exempt component, which matures from 2010 through 2017, with yields ranging from 0.55% with a 1% coupon in 2010 to 3.29% with a 4.5% coupon in 2017. The bonds are not callable.

Merrill Lynch & Co. priced $173 million of revenue bonds for the Pennsylvania Higher Educational Facilities Authority. The bonds mature in 2017, 2019, and 2021, with yields ranging from 3.44% with a 3.5% coupon in 2017 to 4.23% with a 5% coupon in 2021. The bonds, which are callable at par in 2019, are rated AA-minus by Standard & Poor's.

JPMorgan priced $85 million of revenue bonds for the Illinois Finance Authority. The bonds mature in 2029 and 2036, yielding 5.40% with a 5.25% coupon and 5.70% with a 5.5% coupon, respectively. The bonds are callable at par in 2019, except bonds maturing in 2029, which are callable at par in 2014. The credit is rated Aa3 by Moody's and AA-minus by Standard & Poor's and Fitch.

JPMorgan also priced $100 million of revenue bonds for the Dormitory Authority of the State of New York. The bonds mature in 2040, yielding 4.80% with a 5% coupon. The bonds, which are callable at par in 2019, are rated Aa1 by Moody's and AAA by Standard & Poor's.

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