The municipal market was again quiet and largely unchanged yesterday, in light activity, although several of the week's largest scheduled transactions were priced in the primary market.In the new-issue market yesterday, New Jersey competitively sold $1.9 billion of tax and revenue anticipation notes to JPMorgan with a net interest cost of 0.54%. The bonds mature in June 2010, yielding 0.53% with a 2.5% coupon. The credit is rated MIG-1 by Moody's Investors Service and F1-plus by Standard & Poor's.
Barclays Capital priced $750 million of tax and revenue anticipation notes for the Los Angeles Unified School District. The Trans mature in Aug. 2010, yielding 0.62% with a 2% coupon. The credit is rated MIG-1 by Moody's and SP-1-plus by Standard & Poor's.
Morgan Stanley priced $400 million of taxable Build America Bonds for the Metropolitan Washington Airports Authority. The Dulles toll road revenue bonds mature in 2046, yielding 7.46% priced at par, or 4.85% after the 35% federal subsidy. The bonds were priced to yield 300 basis points over the comparable Treasury yield. The bonds, which are subject to make-whole redemption at Treasuries plus 50 basis points, are rated Baa1 by Moody's and BBB-plus by Standard & Poor's.
The deal also contained $560.3 million of non-BABs. Bonds from the $195 million Series A current interest bonds mature in 2032, 2039, and 2044. Bonds from the $207.1 million Series B capital appreciation bonds mature from 2012 through 2040. Bonds from the $158.2 million series of convertible capital appreciation bonds mature in 2041. Pricing information on the bonds was not available by press time.
Traders said tax-exempt yields remained flat in the secondary market.
"We're not seeing a whole lot of activity," a trader in New York said. "It's just fairly quiet, and pretty unchanged. I don't think there's a tone in either direction, just pretty flat."
"Just another quiet, unchanged day," a trader in Los Angeles said. "People were interested in some of the new issues out there, but I didn't see a whole lot going on in the secondary."
Trades reported by the Municipal Securities Rulemaking Board yesterday showed little movement. A dealer sold to a customer California BABs 7.5s of 2034 at 7.50%, even with where they traded Tuesday. Bonds from an interdealer trade of Washington 5s of 2026 yielded 4.13%, even with where they were sold Tuesday. Bonds from an interdealer trade of taxable Illinois 4.45s of 2023 at 5.49%, even with where they traded Tuesday. A dealer sold to a customer insured El Paso 4.75s of 2033 at 5.08%, even with where they were sold Tuesday.
A dealer bought from a customer insured Massachusetts 5.5s of 2030 at 4.47%, even with where they were sold Tuesday. A dealer bought from a customer Oregon 5s of 2029 at 4.35%, even with where they traded Tuesday. A dealer sold to a customer New Jersey Turnpike Authority BABs 7.41s of 2040 at 7.22%, even with where they traded Tuesday. A dealer sold to a customer Puerto Rico Electric Power Authority 5.5s of 2038 at 5.97%, even with where they traded Tuesday.
The Treasury market showed losses yesterday. The yield on the benchmark 10-year note, which opened at 3.69%, was quoted near the end of the session at 3.76%. The yield on the two-year note was quoted near the end of the session at 1.23% after opening at 1.20%. The yield on the 30-year bond, which opened at 4.46%, was quoted near the end of the session at 4.56%.
As of Tuesday's close, the triple-A muni scale in 10 years was at 81.2% of comparable Treasuries, according to Municipal Market Data. Additionally, 30-year munis were 105.2% of comparable Treasuries. As of Tuesday's close, 30-year tax-exempt triple-A general obligation bonds were at 108.3% of the comparable London Interbank Offered Rate.
In economic data released yesterday, factory orders rose 0.4% in June, after a revised 1.1% increase the previous month. Economists polled by Thomson Reuters had predicted a 1.0% decline. Excluding transportation, factory orders climbed 2.3% in June, after a revised 0.9% uptick the prior month.
The Institute for Supply Management's non-manufacturing business activity composite index was 46.4 in July, down from 47.0 in June. Economists polled by Thomson Reuters had expected a 48.0 level.
Elsewhere in the new-issue market, Morgan Stanley priced $135.9 million of revenue bonds for the New Hampshire Health and Education Facilities Authority. The bonds mature from 2010 through 2022, with term bonds in 2033 and 2038. Yields range from 2.20% with a 3% coupon in 2010 to 6.20% with a 6% coupon in 2038. The bonds, which are callable at par in 2019, are rated A-plus by both Standard & Poor's and Fitch Ratings.
Citi priced $130.1 million of revenue refunding certificates of participation for the Orange County, Calif., Water District. The bonds mature from 2010 through 2029, with term bonds in 2032, 2034, 2039, and 2041. Yields range from 0.57% with a 2% coupon in 2010 to 5.18% with a 5% coupon in 2041. The bonds, which are callable at par in 2019, are rated Aa2 by Moody's and triple-A by both Standard & Poor's and Fitch.
