Munis Slightly Firmer as Gains Return

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The municipal market was slightly firmer yesterday, posting gains for the first time in nearly two weeks.

"It's been a while since we've had a day that was just better, almost a couple weeks now, after that little run of selling off a little bit," a trader in San Francisco said. "But today, we are definitely doing a little better. I'd say we're up a good two basis points, maybe three in spots. There was a decent amount of activity out there today, mostly showing up later in the day. It had been a pretty quiet morning. But some business got done, and we were a bit better."

The Treasury market showed some gains yesterday. The yield on the benchmark 10-year Treasury note, which opened at 2.64%, was quoted near the end of the session at 2.53%. The yield on the two-year note was quoted near the end of the session at 0.81% after opening at 0.83%. The yield on the 30-year bond, which opened at 3.38%, was quoted near the end of the session at 3.24%.

In the new-issue market yesterday, Barclays Capital priced $325 million of general revenue bonds for New York's Triborough Bridge and Tunnel Authority. The bonds mature from 2010 through 2029, with term bonds in 2034 and 2038. Yields range from 1.35% with a 2.5% coupon in 2010 to 5.48% with a 5.375% coupon in 2038.

This follows a one-day retail order period, which took place Monday. According to a press release, $142 million of retail orders were received during the one-day retail period held Monday. The transaction was increased in size by $75 million due to strong investor demand in yesterday's institutional order period.

The bonds, which are callable at par in 2018, are rated Aa2 by Moody's Investors Service, AA-minus by Standard & Poor's, and AA by Fitch Ratings.

Meantime, Morgan Stanley priced $300 million of public utility senior-lien revenue bonds for the District of Columbia Water and Sewer Authority. The bonds mature from 2010 through 2019, with term bonds in 2024, 2029, 2030, 2035, and 2039. Yields range from 1.35% with a 3% coupon in 2010 to 5.67% with a 5.5% coupon in 2039. The bonds, which are callable at par in 2018, are rated Aa3 by Moody's, AA by Standard & Poor's, and AA-minus by Fitch.

Goldman, Sachs & Co. priced $288.6 million of Yankee Stadium project pilot revenue bonds for the New York City Industrial Development Agency. The bonds mature in 2049, yielding 7.00%, priced at par. The bonds, which are callable at par in 2019, are backed by Assured Guaranty Corp. The underlying credit is rated Baa3 by Moody's and BBB-minus by Standard & Poor's.

Morgan Stanley priced $211.4 million of revenue bonds for the Illinois Finance Authority in two series. Bonds from the $176.3 million Series A mature from 2013 through 2019, with term bonds in 2021, 2024, 2030, and 2038. Yields range from 4.65% with a 5% coupon in 2013 to 7.625% with a 7.25% coupon in 2038. Bonds from the $35.1 million Series B mature in 2030 and 2038, yielding 7.45% and 7.625%, respectively, both with 7.25% coupons. All bonds are callable at par in 2018, and are rated A3 by Moody's and A-minus by both Standard & Poor's and Fitch.

In the competitive sector, Maryland sold $165 million of consolidated public improvement bonds to Merrill Lynch & Co. with a true interest cost of 3.66%. The bonds mature from 2009 through 2028, with coupons ranging from 2% in 2009 to 4.75% in 2028. None of the bonds were formally re-offered. The bonds, which are callable at par in 2018, are rated triple-A by all three major ratings agencies.

Meanwhile, JPMorgan priced $150 million of water system revenue bonds for the Los Angeles Department of Water and Power. The bonds mature from 2016 through 2031, with term bonds in 2034 and 2038. Yields range from 2.74% with a 5% coupon in 2016 to 5.48% with a 5.375% coupon in 2038. The bonds, which are callable at par in 2019, are rated Aa3 by Moody's and AA by both Standard & Poor's and Fitch.

Colorado's Cherry Creek School District No. 5 competitively sold $101.8 million of general obligation bonds to JPMorgan with a TIC of 4.26%. The bonds mature from 2009 through 2028, with yields ranging from 1.23% with a 3% coupon in 2010 to 4.88% with a 5% coupon in 2028. Bonds maturing in 2009 will be decided via sealed bid. Bonds maturing in 2022 were not formally re-offered. The bonds, which are callable at par in 2018, are rated Aa2 by Moody's and AA by Standard & Poor's.

In economic data released yesterday, the consumer confidence index decreased in January, falling to an all-time low of 37.7 from an upwardly revised 38.6 last month. Economists polled by Thomson Reuters predicted the index would rise to 39.0.

A slate of additional economic data will be released later this week. Tomorrow will see the release of initial jobless claims for the week ended Jan. 24, continuing jobless claims for the week ended Jan. 17, the December durable goods report, and December new home sales. Friday, the advance fourth-quarter gross domestic product report is scheduled for release, along with the January Chicago purchasing managers index and the final January University of Michigan consumer sentiment index.

Economists polled by Thomson Reuters are predicting 575,000 initial jobless claims, 4.650 million continuing jobless claims, a 2.0% decline in durable goods, a 2.7% dip in durable goods excluding transportation, 400,000 new home sales, a 5.4% drop in GDP, a 34.0 Chicago PMI reading, and a 61.9 Michigan sentiment index.

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