The municipal market finished weaker for the sixth straight day yesterday, while underwriters priced for institutional clients the remainder of a $1.64 billion offering from Florida’s Citizens Property Insurance Corp.
The Bond Buyer 40-bond index dropped once again, following the weaker trend that began one week ago. The index has fallen every day since hitting its highest point of the month Wednesday after a strong April rally.
Traders said the market may have overshot itself and may no longer be as attractive for retail investors. That has contributed to a steady weakness over the past few days, they said.
“Municipals continue to cheapen a little bit, with particular pressure on the long end where retail is not very interested in bonds that don’t provide 5% yield to maturity,” a trader in New York said. “It’s not a sell-off.”
Traders have also said the market may have overextended its rally last week on heavy issuance of taxable Build America Bonds, overstating the impact they would have on long-term supply and demand in the tax-exempt space.
“Market traded lackluster again,” a trader in Chicago said. “The sense is we’re somewhat overbought. I think the market is tired.”
In the new-issue market yesterday, Goldman, Sachs & Co. priced the remainder of Florida’s $1.64 billion Citizens offering after pricing the deal for retail yesterday. Bonds maturing in the $1.02 billion Series 2009A-1 mature in 2012, 2014, 2016, and 2017 with multiple tranches in each year, some insured by Assured Guaranty Corp. Yields range from 4.125% with 4% and 5% coupons on two insured tranches in 2012 to 5.7% with a 5.50% coupon and 6% coupon on two tranches in 2016. The 2017 maturities were created in a later pricing.
Goldman also priced $500 million in short-term notes maturing June 2010 yielding 3.625% with a 4.50% coupon.
JPMorgan priced and repriced a $387.8 million fixed-rate offering for Catholic Healthcare West. The $337.1 million of revenue bonds issued through the California Health Facilities Financing Authority mature from 2010 through 2022 with term bonds in 2025, 2029, 2034 and 2039.
Yields range from 2.58% with a 4% coupon in 2010 to 6.15% with a 6% coupon in 2039. The bonds are callable at par in 2019 except for a $20.56 million tranche maturing 2034, which are callable at par in 2014.
JPMorgan also priced $50.7 billion of health facility revenue bonds issued through the Maricopa County, Ariz., Industrial Development Authority, which mature 2010 through 2019 with term bonds in 2039.
Yields ranged from 2.58% with a coupon of 4% in 2010 to 6.13% with a coupon of 6% in 2039. The bonds are callable at par in 2019.
The bonds are rated A2 by Moody’s, A by Standard & Poor’s and A-plus by Fitch.
JPMorgan priced an additional $193 million of variable-rate bonds for Catholic Healthcare West.
The deal came in three series from both the Maricopa County IDA and the California Health Facilities Financing Authority.
RBC Capital Markets priced $100 million of revenue bonds for Pennsylvania’s Commonwealth Financing Authority, some of which were taxable.
Bonds from the $50 million tax-exempt portion mature 2024 through 2028 with a term bond in 2031. Yields range from 4.42% with a 5% coupon in 2024 to 5.10% with a 5% coupon in 2031.
The bonds, which are callable at par in 2019, are insured by Assured Guaranty Corp. and have underlying ratings of A1 from Moody’s Investors Service and AA-minus from Standard & Poor’s and Fitch Ratings.
The offering also included a $50 million taxable portion.
Banc of America Securities LLC also priced $46.8 billion in revenue bonds for Montgomery County, Md. The bonds mature 2010 though 2029, with yields ranging from 1.28% with a 3% coupon in 2011 to 4.63% with a 5% coupon in 2029. Bonds maturing in 2010 were sold via sealed bid.
The bonds, which are callable at par in 2019, are rated AA-minus by Standard & Poor’s.
In the largest competitive deal of the day, Kent County, Mich., sold $36 million of general obligation limited tax notes to JPMorgan at a true interest cost of 1.8388%.
The notes have a $27 million maturity in 2010 and a $9 million maturity in 2011. They are rated MIG-1 by Moody’s and SP-1-plus by Standard & Poor’s.
The Treasury market was mixed yesterday. The yield on the benchmark 10-year note, which opened at 3.11%, closed at 3.12%.
The yield on the two-year note closed at 0.91% after opening at 0.95%. The yield on the 30-year bond, which opened at 4.03%, closed at 4.04%.
In economic data released yesterday, initial jobless claims for the week of April 25 fell 14,000 to 631,000, with economists polled by IFR Markets predicting claims to stay at 645,000. Personal income fell 0.3% and personal consumption fell 0.2% in March.
Today, the Institute for Supply Management will release its manufacturing index. Economists expect a 38.0 reading.
