The municipal market was unchanged yesterday, as trading in the secondary market remained somewhat quiet, and interest in the primary market waned with the lion's share of this week's sizeable new issuance in the past."You had people involved with the new issues the last couple days, but there's not really much left," a trader in New York said. "The secondary had been quiet all week anyway, but it's still quiet today. There's just not a whole lot going on right now. We're pretty flat, pretty quiet."
"There are some scattered things getting done here and there," a trader in Los Angeles said regarding the secondary market. "There are still people who have stuff they want to move, other people that are looking for stuff. So we're active in that respect. But it's late in the summer, a lot of people aren't around, and those that are really are only doing stuff when they need to, when they feel compelled. A lot of people are content to sit on the sidelines, and it'll probably continue like this until after Labor Day."
In the new-issue market yesterday, Illinois competitively sold $1.25 billion of notes, in three series. Notes from a $500 million series maturing in March 2010 were won by JPMorgan at a true interest cost of 0.77%. The general obligation certificates have a 2% coupon and were not formally re-offered. Notes from a second $500 million series maturing in June 2010 were won by JPMorgan at a TIC of 1.15%. These notes have a 2% coupon and were not formally re-offered. A third series, worth $250 million, was won by JPMorgan at a TIC of 1.06%. These GO certificates mature in April 2010, with a 2% coupon, and were not formally re-offered. The credit is rated SP-1 by Standard & Poor's and F1 by Fitch Ratings.
Loop Capital Markets priced $430.9 million of public improvement refunding bonds for Houston. The bonds mature from 2010 through 2030, with term bonds in 2033, 2035, and 2036. Yields range from 0.91% with a 3% coupon in 2011 to 5.00% priced at par in 2036. Bonds maturing in 2010 were not formally re-offered. The bonds, which are callable at par in 2019, are rated Aa3 by Moody's Investors Service and AA by Standard & Poor's.
The Treasury market mostly showed gains yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.51%, finished at 3.43%. The yield on the two-year note finished at 1.00%, after opening at 0.99%. And the yield on the 30-year bond, which opened at 4.29%, finished at 4.24%.
As of Wednesday's close, the triple-A muni scale in 10 years was at 84.7% comparable Treasuries, according to Municipal Market Data. Additionally, 30-year munis were 105.3% of comparable Treasuries. Also, as of Wednesday's close, 30-year tax-exempt triple-A rated GOs were at 109.1% of the comparable London Interbank Offered Rate.
Elsewhere in the new-issue market yesterday, the Florida State Board of Education competitively sold $54 million of capital outlay bonds to Citi, with a TIC of 3.29%. The bonds mature from 2010 through 2029, with yields ranging from 1.35% with a 4% coupon in 2012 to 4.00% priced at par in 2024. Bonds maturing in 2010, 2011, 2019, and from 2025 through 2029 were not formally re-offered. The bonds, which are callable at 101 in 2019, declining to par in 2020, are rated Aa1 by Moody's, AAA by Standard & Poor's, and AA-minus by Fitch.
Banc of America Securities LLC priced $53.5 million of solid waste enterprise revenue bonds for California's South Bayside Waste Management Authority. The bonds mature from 2012 through 2019, with term bonds in 2024, 2029, and 2036. Yields range from 2.72% with a 5% coupon in 2012 to 6.12% with a 6% coupon in 2036. The bonds, which are callable at par in 2019, are rated A3 by Moody's and A-minus by Standard & Poor's.
Norwood, Mass., competitively sold $46 million of GO municipal purpose loan bonds to Merrill Lynch & Co., at a TIC of 3.54%. The bonds mature from 2010 through 2031, with a term bond in 2034. Yields range from 0.50% with a 2% coupon in 2010 to 4.14% with a 5% coupon in 2029. Bonds maturing from 2014 through 2019, and in 2030, 2031, and 2034 were not formally re-offered. The bonds, which are callable at par in 2019, are rated AA by Standard & Poor's.
Southwest Securities priced $22.6 million of limited ad valorem tax utility system bonds for Texas' Cibolo Canyons Special Improvement District. The bonds mature from 2010 through 2022, with term bonds in 2029 and 2034. Yields range from 3.00% priced at par in 2010 to 6.45% with a 6.25% coupon in 2034. The bonds, which are callable at par in 2019, are rated BBB-minus by Standard & Poor's.
In economic data released yesterday, the composite index of leading economic indicators gained 0.6% in July. LEI increased a revised 0.8% in June.
Economists polled by Thomson Reuters predicted LEI would be up 0.6% in the month.
Also, this month's Federal Reserve Bank of Philadelphia Report on Business indicates the general business conditions index increased to positive 4.2 in August from negative 7.5 in July. Economists surveyed by Thomson Reuters predicted a reading of negative 2.0 for the index.
