The municipal market was slightly weaker yesterday amid fairly light secondary trading.
“It could be weaker by up to three basis points or so, depending on what you’re trading,” a trader in Los Angeles said. “I think one to three basis points weaker is probably a safe estimate. But there isn’t a ton of activity out there. It’s been somewhat quiet on the Street. But I’d say we’re a couple basis points weaker on the whole.”
“There’s a little bit of weakness, but it’s fairly quiet,” a trader in New York said. “We’re probably down a basis point or two in spots right now.”
The Treasury market mostly showed some losses yesterday, with some slight gains on the long end. The benchmark 10-year note was quoted near the end of the session with a yield of 3.87% after opening at 3.86%. The yield on the two-year finished at 1.07% after opening at 1.04%. The yield on the 30-year bond was quoted near the end of the session at 4.76% after opening at 4.77%.
The Municipal Market Data triple-A scale yielded 3.08% in 10 years and 3.86% in 20 years yesterday, nearly matching Monday’s levels of 3.06% and 3.85%. The scale yielded 4.17% in 30 years yesterday, matching Monday.
Monday’s triple-A muni scale in 10 years was at 79.1% of comparable Treasuries and 30-year munis were at 87.4%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 93.1% of the comparable London Interbank Offered Rate.
In the new-issue market yesterday, Bank of America Merrill Lynch priced $178.3 million of system revenue bonds for the Arizona Board of Regents in two series, including $165.9 million of taxable Build America Bonds.
The BABs mature from 2016 through 2025, with term bonds in 2030 and 2039. Yields range from 4.01% in 2016, or 2.61% after the 35% federal subsidy, to 6.30% in 2039, or 4.10% after the subsidy.
The bonds were priced to yield between 100 and 185 basis points over the comparable Treasury yield, and are subject to a make-whole call at Treasuries plus 100 basis points.
The deal also contained a $12.4 million tax-exempt component, which matures from 2013 through 2015, with yields ranging from 1.58% with a 3% coupon in 2013 to 2.39% with a 5% coupon in 2015. The bonds are not callable.
The credit is rated A1 by Moody’s Investors Service and AA by Standard & Poor’s.
Wells Fargo Securities priced $176.6 million of lease revenue bonds for the California State Public Works Board.
The bonds mature from 2012 through 2025, with term bonds in 2030 and 2035. Yields range from 1.71% with a 3% coupon in 2012 to 6.07% with a 6.125% coupon in 2035.
The bonds, which are callable at par in 2020, are rated Baa2 by Moody’s, BBB-plus by Standard & Poor’s, and BBB-minus by Fitch Ratings.
Pennsylvania’s Temple University competitively sold $120 million of funding obligations to PNC Capital Markets with a net interest cost of 0.40%.
The debt matures in 2011, with a 1.5% coupon, and was not formally re-offered. The credit is rated MIG-1 by Moody’s.
Southwest Securities priced $86 million of unlimited-tax school building bonds for Texas’ Hallsville Independent School District, including $71.7 million of taxable BABs.
The BABs mature from 2017 through 2020, and in 2022, 2024, 2026, 2028, and 2030.
Yields range from 4.272% priced at par in 2017, or 2.78% after the 35% federal subsidy, to 5.966% priced at par in 2030, or 3.88% after the subsidy.
The bonds were priced to yield between 55 and 175 basis points over the comparable Treasury yield, and are callable at par in 2020.
Bonds from the $14.3 million tax-exempt series mature from 2011 through 2016, with yields ranging from 0.47% with a 3% coupon in 2011 to 2.54% with a 4% coupon in 2016. The bonds are not callable.
The bonds are backed by the Permanent School Fund guarantee program.
The underlying credit is rated A3 by Moody’s and A-plus by Standard & Poor’s.
First Southwest Co. priced $79.7 million of bonds for Hays County, Tex., in two series.
Bonds from the larger $67.3 million series mature from 2012 through 2030, with a term bond in 2035.
Yields range from 0.99% with a 2% coupon in 2012 to 4.63% with a 5% coupon in 2035. The bonds are callable at par in 2019.
Bonds from the smaller $12.3 million series mature from 2010 through 2021, with yields ranging from 0.40% with a 2% coupon in 2010 to 3.77% with a 3.625% coupon in 2021. The bonds are callable at par in 2019.
The deal also contains a $50 million series of capital appreciation bonds, which mature in 2012, with a yield to maturity of 1.50%.
The credit is rated AA by Standard & Poor’s.
Meanwhile, JPMorgan priced $50 million of refunding revenue bonds for the California Infrastructure and Economic Development Bank. The bonds mature in 2026, yielding 2.25% priced at par, and are not callable.
The credit is rated A3 by Moody’s, BBB-plus by Standard & Poor’s, and A by Fitch.
In economic data released yesterday, the consumer confidence index rose to 52.5 in March, exceeding economists’ expectations and rebounding from poor figures in February.
The February index was revised slightly higher to 46.4 from 46.0 reported last month.
Economists expected the index would increase to 50.0, according to the median estimate from Thomson Reuters.
