The municipal market was unchanged yesterday amid fairly light activity in the secondary, as the week’s largest scheduled transaction was priced in the primary market.
“We’re pretty flat at this point,” a trader in New York said. “There’s maybe a bit more activity than there’s been on the Street, but I still wouldn’t call it particularly active. It’s still reasonably quiet, and most of the attention is focused on the new issues.”
“I’m not really seeing any movement,” a trader in Los Angeles said. “It’s been hard to get anything going, and even if it’s a little bit more active, it’s still quiet. A lot of people are still on the sidelines, and I’m not sure that anyone’s really itching to come off the sidelines just yet either.”
In the new-issue market yesterday, Bank of America Merrill Lynch priced $750 million of taxable Build America Bonds for the New Jersey Economic Development Authority, the BAB market’s largest-ever floating-rate note sale.
The BABs mature in 2013 and yield the three-month London Interbank Offered Rate plus 1.00%.
The credit is rated Aa3 by Moody’s Investors Service and AA-minus by Standard & Poor’s and Fitch Ratings.
The Virginia Transportation Board competitively sold $407.2 million of taxable transportation capital projects revenue BABs to Goldman, Sachs & Co.
The bonds mature from 2017 through 2024, with a term bond in 2035. Yields range from 3.86% with a 3.85% coupon in 2017, or 2.51% after the 35% federal subsidy, to 5.35% priced at par in 2035, or 3.48% after the subsidy.
The bonds were priced to yield between 30 and 115 basis points over the comparable Treasury yields, and contain a make-whole call at Treasuries plus 20 basis points.
The Transportation Board also competitively sold $85.5 million of tax-exempt debt to Goldman Sachs.
These bonds mature from 2011 through 2016, yielding 1.14%, 1.55%, and 1.89% in 2013, 2014, and 2015, all with 5% coupons. Bonds maturing in 2011, 2012, and 2016 were not formally re-offered. The bonds are not callable.
The credit is rated Aa1 by Moody’s and AA-plus by both Standard & Poor’s and Fitch.
The Metropolitan Washington Airports Authority late Tuesday indefinitely postponed its sale of $650 million of Dulles Toll Road revenue bonds that were slated to be priced by joint book-runners Morgan Stanley and Citi.
The MWAA was originally set to price the deal yesterday, and delayed its initial sale schedule due to market turbulence, but expected to still price the debt this week. However, the deal will now be scheduled on a week-to-week basis. The agency is watching for a “sense of normalcy” to issue, said chief financial officer Andrew T. Rountree.
“The benefit we have is we can be very flexible,” Rountree said. He added that the timing of the deal “is not absolutely critical to us. We have the luxury to wait a bit until markets settle.”
The Treasury market was mixed yesterday. The benchmark 10-year finished at 3.58% after opening at 3.52%. The 30-year Treasury finished at 4.48% after opening at 4.42%. The two-year note yield finished at 0.87% after opening at 0.84%.
The triple-A scale yielded 2.95% in 10 years Tuesday, matching Tuesday’s level, but still much stronger than the late March level of 3.09%, according to Municipal Market Data. The 20-year yield was 3.75%, matching Tuesday’s reading, while the scale yielded 4.04% in 30 years, which also matched Tuesday.
Tuesday’s triple-A muni scale in 10 years was at 83.6% of comparable Treasuries and 30-year munis were at 91.4%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 95.3% of the comparable LIBOR.
Elsewhere in the new-issue market yesterday, Morgan Keegan & Co. priced $105 million of waterworks and sewer system revenue bonds for Columbia, S.C.
The bonds mature from 2013 through 2034, with a term bond in 2040. Yields range from 1.14% with a 3% coupon in 2013 to 4.26% with a 5% coupon.
The bonds, which are callable at par in 2020, are rated Aa1 by Moody’s and AA by Standard & Poor’s.
The Virginia Beach Development Authority competitively sold $98 million of public facilities refunding revenue bonds to Morgan Keegan with a TIC of 2.99%.
The bonds mature from 2010 through 2022, with yields ranging from 0.40% with a 2% coupon in 2010 to 3.40% with a 4% coupon in 2022. The bonds are callable at par in 2020.
The authority also competitively sold $40.5 million of refunding debt to Morgan Keegan with a TIC Of 3.40%.
The bonds mature in 2010, from 2016 through 2018, and from 2020 through 2023.
Yields range from 0.40% with a 2% coupon in 2010 to 3.46% with a 5% coupon in 2023. The bonds are callable at par in 2020.
The credit is rated Aa2 by Moody’s, AA-plus by Standard & Poor’s, and AA by Fitch.
RBC Capital Markets priced $74.7 million of housing finance program bonds for the Tennessee Housing Development Agency in two series.
Bonds from Series A1 mature from 2011 through 2021, with term bonds in 2024 and 2027.
Yields range from 0.60% priced at par in 2011 to 3.59% with a 5% coupon in 2027. The bonds are callable at par in 2019.
Bonds from Series A2, which is subject to the alternative minimum tax, mature in 2025, yielding 4.20% priced at par. The bonds are callable at par in 2019.
The credit is rated Aa2 by Moody’s.
The economic calendar was light yesterday.
