The municipal market was mostly unchanged yesterday, as the California State Public Works Board came to market with about $460 million of taxable and tax-exempt debt.
“There’s not a lot of movement out there right now,” a trader in New York said. “It’s somewhat quiet out on the Street. There are some bits and pieces trading, but there isn’t a ton of activity. We’re just pretty flat right now.”
“There might be a bit of a firmer tone in spots, but it’s largely quiet,” a trader in Los Angeles said. “Depending on what you’re trading, you could pick up a basis point or so. But on the whole, it’s pretty flat.”
In the new-issue market yesterday, RBC Capital Markets priced $459.8 million of taxable and tax-exempt lease revenue bonds for the California State Public Works Board in multiple series, including $246.4 million of taxable Build America Bonds.
Bonds from the $96.8 million Series B-2 taxable BABs mature in 2035, yielding 7.80%, or 5.07% after the 35% federal subsidy, priced at par.
The bonds were priced to yield 310 basis points over the comparable Treasury yield, and contain a make-whole call at Treasuries plus 45 basis points.
Bonds from the $149.6 million Series C-2 taxable BABs mature in 2025 and 2035, yielding 6.282% and 7.004%, priced at par, or 4.08% and 4.55% after the 35% federal subsidy.
The bonds were priced to yield 245 and 230 basis points over the comparable Treasury yields, and contain a make-whole call at Treasuries plus 35 basis points prior to March 1, 2020, at which point they are callable at par.
Bonds from the $50.5 million taxable series mature from 2014 through 2020, with term bonds in 2025 and 2035.
Yields range from 3.624% in 2014 to 7.004% in 2035, all priced at par.
The bonds were priced to yield between 105 and 245 basis points over the comparable Treasury yield, and contain a make-whole call at Treasuries plus 35 basis points prior to March 1, 2020, at which point they are callable at par.
Bonds from the $82.9 million tax-exempt series mature from 2013 through 2026, with term bonds in 2030 and 2035. Yields range from 2.30% with a 3% coupon in 2013 to 5.73% with a 5.7% coupon in 2035. The bonds are callable at par in 2020.
Bonds from the $80.0 million tax-exempt series mature from 2012 through 2026, with term bonds in 2030 and 2035. Yields range from 1.24% with a 3% coupon in 2012 to 5.00% priced at par in 2035. The bonds are callable at par in 2020.
The credit is rated Aa2 by Moody’s Investors Service and AA-minus by both Standard & Poor’s and Fitch Ratings.
The Treasury market showed some gains yesterday. The benchmark 10-year note was quoted near the end of the session with a yield of 3.84% after opening at 3.86%.
The yield on the two-year was quoted near the end of the session at 1.03% after opening at 1.04%. The yield on the 30-year bond was quoted near the end of the session at 4.72% after opening at 4.74%.
The Municipal Market Data triple-A scale yielded 3.05% in 10 years and 3.85% in 20 years yesterday, compared with Wednesday’s levels of 3.06% and 3.85%. The scale yielded 4.15% in 30 years yesterday, matching Wednesday.
Wednesday’s triple-A muni scale in 10 years was at 79.3% of comparable Treasuries and 30-year munis were at 87.9%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 92.2% of the comparable London Interbank Offered Rate.
In economic data released yesterday, initial jobless claims increased by 24,000 to 484,000 for the week ending April 10, the second straight weekly increase and the highest level since Feb. 20.
Continuing claims increased by 73,000 to 4.639 million.
Economists expected 440,000 initial claims and 4.520 million continuing claims, according to the median estimate from Thomson Reuters.
Initial claims for the week ending April 3 were unrevised at 460,000. Continuing claims were revised to 4.566 million in the week ending March 27.
Industrial production edged up 0.1% in March, the ninth consecutive monthly increase, but the growth was constrained partly due to storms.
Capacity utilization increased to 73.2%, the 10th consecutive monthly increase and the highest level since November 2008, when it was 74.4%.
Economists expected industrial production to rise 0.7% and a capacity utilization level of 73.3%, according to the median estimate from Thomson Reuters.
The Empire State Manufacturing Survey showed “conditions for New York State manufacturers improved at a rapid pace in April,” the Federal Reserve Bank of New York reported yesterday, as the general business conditions index climbed to 31.86 in the month from 22.86 in March.
Economists surveyed by Thomson had expected the index would be 24.00.
The region’s manufacturing sector continued to improve, as the general business conditions index increased to 20.2 in April from 18.9 in March, this month’s Federal Reserve Bank of Philadelphia Report on Business indicates.
Economists surveyed by Thomson Reuters predicted a reading of 20.0 for the index.
