The municipal market was unchanged to slightly weaker yesterday. Traders said tax-exempt yields were flat to higher by about two basis points overall.
“We’re a little bit weaker, but that weakness is mostly out long,” a trader in New York said. “It feels a bit similar to yesterday, in terms of tone, though there’s a bit more activity. But I’d say we’re probably weaker a basis point or two on the long end, and probably flat to down a basis point everywhere else.”
“There’s definitely some weakness out there,” a trader in Los Angeles said. “We’re down a couple of basis points, probably about two basis points or so on the whole. There’s some decent activity out there, and we’re flat in spots, but we’re mostly down a little bit.”
In the new-issue market yesterday, Ramirez & Co. priced $400 million of taxable Build America Bonds for the New York City Municipal Water Finance Authority.
The bonds mature in 2041 and 2042, yielding 6.452% and 5.952%, respectively, priced at par, or 4.19% and 3.87% after the 35% federal subsidy.
The bonds are rated Aa3 by Moody’s Investors Service, AA-plus by Standard & Poor’s, and AA by Fitch Ratings.
The bonds were priced to yield between 140 and 190 basis points over the comparable Treasury yield.
They are callable at par in 2020, except for those bonds maturing in 2042, which have a make-whole call at Treasuries plus 30 basis points.
Also, Citi today will sell $1.4 billion of sales tax bonds for the Puerto Rico Sales Tax Financing Corp., but completed the second day of a two-day retail order period yesterday.
The Series 2010A bonds consist of sales tax revenue subordinate-lien debt that is structured to mature in three tranches, including current interest bonds from 2015 to 2030, capital appreciation bonds maturing from 2030 to 2037, and a convertible capital appreciation bond due in 2029. Retail pricing information was not available by press time.
The bonds are rated A2 by Moody’s, A-plus by Standard & Poor’s, and A by Fitch.
The Treasury market showed little movement yesterday. The yield on the benchmark 10-year note opened at 3.62% and was unchanged near the end of the session.
The yield on the two-year note opened at 0.81% and was also quoted unchanged near the end of the session. The yield on the 30-year bond was quoted near the end of the session at 4.55% after also opening at 4.55%.
Yesterday’s Municipal Market Data triple-A scale yielded 3.00% in 10 years and 3.78% in 20 years, compared to levels of 3.00% and 3.76% on Monday. The scale yielded 4.15% in 30 years yesterday, following Monday’s level of 4.10%.
As of Monday’s close, the triple-A muni scale in 10 years was at 82.9% of comparable Treasuries and 30-year munis were 90.3% of comparable Treasuries, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 92.8% of the comparable London Interbank Offered Rate.
Elsewhere in the new-issue market yesterday, Bank of America Merrill Lynch priced $101 million of higher education facility revenue bonds for the Ohio Higher Educational Facility Commission.
The bonds mature in 2035, 2039, and have a split maturity in 2044. They yield 4.95% with a 4.75% coupon in 2035, 5.00% with a 4.75% coupon in 2039, and both 5.05% with a 5.25% coupon and 5.10% with a 5% coupon in 2044.
The bonds, which are callable at par in 2020, are rated A1 by Moody’s and A-plus by Standard & Poor’s.
Citi priced $89.4 million of unlimited-tax school building bonds for Texas’ Round Rock Independent School District, including $61.8 million of taxable Build America Bonds.
The BABs mature from 2021 through 2024, with term bonds in 2030 and 2035. Yields range from 4.732% priced at par in 2021, or 3.08% after the 35% federal subsidy, to 6.054% priced at par in 2035, or 3.94% after the subsidy.
The tax-exempt $27.7 million series matures from 2012 through 2020, with coupons ranging from 3% to 5%. Yields were not available by press time.
The bonds are rated Aa1 by Moody’s and AA by Standard & Poor’s.
Bank of America Merrill rated $58.5 million of facility revenue bonds for New York’s Chautauqua Industrial Development Agency.
The bonds mature in 2042, yielding 5.875% priced at par, and are callable at par in 2020. The credit is rated Baa3 by Moody’s and BB-plus by Standard & Poor’s.
Binghamton, N.Y., competitively sold $31.1 million of various-purpose bond anticipation notes to Oppenheimer & Co. with a true interest cost of 1.08%.
The Bans mature in 2011, with a 1.5% coupon, and were not formally re-offered.
Maine competitively sold $27 million of general obligation bond anticipation notes to JPMorgan, with a net interest cost of 0.20%.
The Bans mature in June, with a 1% coupon, and were not formally re-offered. The credit is rated MIG-1 by Moody’s.
Trades reported by the Municipal Securities Rulemaking Board yesterday showed little movement.
Bonds from an interdealer trade of Texas 4.5s of 2035 yielded 4.60%, even with where they were sold Monday.
Bonds from an interdealer trade of taxable Fresno, Calif., BABs, 6.75s of 2040 yielded 6.86%, even with where they were sold Monday.
In economic data released yesterday, the consumer confidence index climbed to 55.9 in January from an upwardly revised 53.6 last month.
The December index was originally reported as 52.9. Economists polled by Thomson Reuters predicted the index would be 53.5.
