Munis Firmer With Main Focus on New Deals

The municipal market was slightly firmer yesterday amid light to moderate activity in the secondary.

“We’re firming up a bit,” a trader in New York said. “We’re probably better a basis point or two at this point. There is some decent activity in the secondary, but most of the attention is on the new issues this week.”

“The gains are a bit more pronounced on the shorter end of the curve,” a trader in Los Angeles said. “I’d say we’re as much as three or four basis points better inside of five years, but out long, it’s probably not more than a basis point better.”

In the new-issue market yesterday, Bank of America Merrill Lynch priced for retail investors portions of the forthcoming $1.04 billion sale of general airport revenue bonds for Chicago, on behalf of O’Hare International Airport.

Two series were priced during the retail order period, including $571.7 million of taxable Build America Bonds.

The BABs mature in 2038 and 2040, and were priced to yield 215 and 175 basis points over the comparable Treasury yield. Bonds maturing in 2038 are callable at par in 2020. Bonds maturing in 2040 are subject to a make-whole call at Treasuries plus 100 basis points.

A $100.8 million tax-exempt series was also priced for retail. The bonds mature from 2012 through 2030, with term bonds in 2035 and 2040. Yields range from 1.92% with a 2.5% coupon in 2013 to 5.14% with a 5.125% coupon in 2040. Bonds maturing in 2012 will be decided via sealed bid. The bonds are callable at par in 2020.

The credit is rated A1 by Moody’s Investors Service, A-minus by Standard & Poor’s, and A by Fitch Ratings.

Meanwhile, Morgan Stanley priced $361.1 million of refunding revenue bonds for the Troy, N.Y., Capital Resources Corp., on behalf of Rensselaer Polytechnic Institute, in two series.

Bonds from the $313.8 million Series A mature in 2030 and 2040, yielding 5.15% with a 5% coupon and 5.30% with a 5.125% coupon. The bonds are callable at par in 2020.

Bonds from the $47.3 million Series B mature from 2012 through 2021, with yields ranging from 1.81% with a 3% coupon in 2012 to 4.53% with a 5% coupon in 2021. The bonds are callable at par in 2020.The credit is rated A3 by Moody’s and A by Standard & Poor’s.

The Treasury market mostly showed gains yesterday, aside from mild short-end losses. The benchmark 10-year note was quoted near the end of the session with a yield of 3.82% after opening at 3.84%. The yield on the two-year finished at 1.06% after opening at 1.04%. The yield on the 30-year bond finished at 4.68% after opening at 4.70%.

The Municipal Market Data triple-A scale yielded 3.10% in 10 years and 3.85% in 20 years yesterday, compared with Monday’s levels of 3.11% and 3.85%. The scale yielded 4.16% in 30 years yesterday, matching Monday.

Monday’s triple-A muni scale in 10 years was at 81.9% of comparable Treasuries and 30-year munis were at 87.8%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 92.9% of the comparable London Interbank Offered Rate.

Elsewhere in the new-issue market yesterday, Jefferies & Co. priced $47.8 million of general obligation bonds for Wilmington, Del., in two series.

Bonds from the $43.9 million Series A mature from 2013 through 2025, with yields ranging from 1.54% with a 2.25% coupon in 2013 to 3.92% with a 5% coupon in 2025. The bonds are callable at par in 2020.

The deal also contains a $3.9 million taxable series, which matures from 2010 through 2012, yielding 1.21% and 1.77%, both priced at par, in 2011 and 2012. Bonds maturing in 2010 were not formally re-offered. The bonds were priced to yield 40 basis points over the comparable Treasury yield, and are not callable.

The credit is rated A1 by Moody’s, AA-minus by Standard & Poor’s, and A-plus by Fitch.

RBC Capital Markets priced $25.3 million of special obligation bonds for Kansas City, Mo., in two series.

Bonds from the $5.6 million Series A mature from 2011 through 2028, with a term bond in 2031. Yields range from 1.15% with a 2% coupon in 2011 to 5.05% with a 5% coupon in 2031. The bonds are callable at par in 2020.

Bonds from the $19.7 million Series B mature from 2012 through 2021, with yields ranging from 1.55% with a 2% coupon in 2012 to 4.22% with a 4% coupon in 2021. The bonds are callable at par in 2020.

The credit is rated A3 by Moody’s, AA-minus by Standard & Poor’s, and A-plus by Fitch.

RBC Capital Markets also priced $23.4 million of taxable and tax-exempt debt for Dauphin County, Pa.

A $4.6 million tax-exempt series matures from 2011 through 2014, with yields ranging from 1.00% priced at par in 2011 to 2.27% with a 4% coupon in 2014. The bonds are not callable.

A $1.9 million taxable series matures in 2011 and 2012, yielding 1.83% and 1.88%, both priced at par. The bonds were priced to yield 60 and 65 basis points over the comparable Treasury yield.  The bonds are not callable.

A $16.8 million tax-exempt series matures from 2011 through 2023, with yields ranging from 1.00% priced at par in 2011 to 3.63% with a 4% coupon in 2018. Bonds maturing from 2019 through 2023 were not formally re-offered. The bonds are callable at par in 2018.

The credit is rated AA by Standard & Poor’s.

In economic data released yesterday, import prices rose 0.7% in March. Economists expected import prices to rise 0.9%, according to the median estimate from Thomson Reuters. February’s import prices were revised to a 0.2% decline.

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