The municipal market was unchanged to slightly weaker yesterday, as some of the week’s largest transactions were priced in the new-issue market.
“We’re mostly flat, but there’s still a touch of weakness out there,” a trader in New York said. “We’re sort of picking up where we left off yesterday in that regard. There’s some decent activity, though. Deals are getting done.”
“People are definitely focusing on the new issues,” a trader in Los Angeles said. “There is some activity in the secondary, though. But we’re pretty much unchanged, maybe a bit cheaper here and there. But not more than a basis point or so.”
In the new-issue market yesterday, JPMorgan priced $443.2 million of taxable Build America Bonds for New York’s Metropolitan Transportation Authority.
The BABs mature from 2018 through 2025, with term bonds in 2030 and 2040. Yields range from 4.66% in 2018, or 3.03% after the 35% federal subsidy, to 6.09% in 2040, or 3.96% after the subsidy.
The bonds were priced to yield between 100 and 188 basis points over the comparable Treasury yields, and are not callable.
The credit is rated AA by Standard & Poor’s and A-plus by Fitch Ratings.
JPMorgan priced $447.6 million of second-series revenue refunding bonds for the San Francisco Airport Commission in two series. Pricing information on the bonds was not available by press time.
The bonds were priced for retail investors Tuesday. Bonds from the larger $353.9 million series mature from 2014 through 2027, with yields ranging from 2.12% with a 3% coupon in 2015 to 4.42% with a 4.3% coupon in 2027.
Bonds maturing in 2014 and 2015 were not offered during the retail order period and are insured by Assured Guaranty Municipal Corp. All the remaining bonds are uninsured. Portions of bonds maturing from 2016 through 2023 were not offered to retail investors.
Bonds from the smaller $93.7 million series mature from 2014 through 2027, with yields ranging from 1.57% with a 3% coupon in 2014 to 4.32% with a 4.25% coupon in 2027. Some bonds maturing in 2018 and 2019 were not offered during the retail order period.
The bonds are callable at par in 2020. The underlying credit is rated A1 by Moody’s Investors Service, A by Standard & Poor’s, and A-plus by Fitch.
JPMorgan also priced $183 million of taxable debt for the Airport Commission. These bonds mature from 2011 through 2014, yielding 1.87%, 2.42%, and 2.97% from 2012 through 2014, respectively. Bonds maturing in 2011 were decided via sealed bid.
The bonds were priced to yield between 60 and 95 basis points over the comparable Treasury yields and are not callable.
Meanwhile, Barclays Capital priced $352 million of tax-exempt and taxable bonds for the California State University Trustees in two series, including $205.2 million of taxable BABs.
The BABs mature from 2022 through 2025, with a term bond in 230. Yields range from 5.45% priced at par in 2022, or 3.54% after the 35% federal subsidy, to 6.48% priced at par in 2041, or 4.21% after the subsidy.
The bonds were priced to yield between 180 and 205 basis points over the comparable Treasury yield and are subject to make-whole redemption at Treasuries plus 30 basis points.
Bonds from the $146.9 million tax-exempt series mature from 2010 through 2031, with yields ranging from 0.60% with a 3% coupon in 2011 to 4.70% with a 4.5% coupon in 2031. Bonds maturing in 2010 were decided via sealed bid. These bonds are callable at par in 2020.
The credit is rated Aa3 by Moody’s and A-plus by Standard & Poor’s.
Wisconsin competitively sold $179.1 million of taxable BABs to Citi with a true interest cost of 3.41%.
The BABs mature from 2020 to 2030, with yields ranging from 4.30% priced at par in 2020, or 2.80% after the 35% federal subsidy, to 5.65% priced at par in 2030, or 3.67% after the subsidy. Bonds maturing from 2021 through 2027 were not formally re-offered. The bonds are callable at par in 2020.
Wisconsin also competitively sold $143.5 million of general obligation bonds to Citi, with a TIC of 2.51%.
The bonds mature from 2012 through 2019, with yields ranging from 1.10% with a 2% coupon in 2013 to 3.02% with a 4% coupon in 2019. The bonds are not callable.
The bonds are rated Aa3 by Moody’s, AA by Standard & Poor’s, and AA-minus by Fitch.
The Treasury market was somewhat mixed yesterday. The benchmark 10-year note finished with a yield of 3.64% after opening at 3.65%.
The yield on the two-year finished at 0.92% after opening at 0.91%. The yield on the 30-year bond finished at 4.57%,after opening at 4.59%.
The Municipal Market Data triple-A scale yielded 2.83% in 10 years and 3.78% in 20 years yesterday, following Tuesday’s levels of 2.82% and 3.78%. The scale yielded 4.15% in 30 years yesterday, matching Tuesday.
Tuesday’s triple-A muni scale in 10 years was at 77.0% of comparable Treasuries and 30-year munis were at 90.4%, according to MMD, while 30-year tax-exempt triple-A GOs were at 94.3% of the comparable London Interbank Offered Rate.
In economic data released yesterday, the producer price index fell 0.6% at a seasonally adjusted rate in February, the largest monthly decline in seven months, as energy prices decreased.
Core producer prices increased 0.1%, the second consecutive monthly gain.
Economists polled by Thomson Reuters expected producer prices to fall 0.2% and for core prices to increase 0.1%, according to the median estimate.
