The municipal market was unchanged to slightly firmer yesterday as trading activity picked up a bit after a sleepy start to the holiday-shortened week.
“We were pretty much unchanged today. We pretty much traded where we traded yesterday,” a trader in New York said. “We have unemployment at the end of the week, so let’s see. The Treasury market sold off quite a bit today, but we did not follow. We kind of held in there. And I think that was a surprise.”
“The market itself has been relatively quiet. The new issues out here in California were received fairly well, which has been good news,” a trader in Los Angeles said. “We have noticed a pick up here in trading today, at least here in California. The market feels like it is in decent shape. It is up about two basis points
on the day.”
“Treasuries are off, but the munis are up. And I think it is because it has more to do with supply and demand,” the trader said.
“With the June and July coupon payments coming in and people wanting to reinvest, they have less to choose from. So we are trading in sort of our own little sphere. We aren’t really following the Treasury market right now. I would anticipate we won’t for a while and it’s going to be more supply and demand.”
The Treasury market showed some losses yesterday.
The benchmark 10-year Treasury note was quoted near the end of the session at 3.34% after opening at 3.26%. The 30-year Treasury bond was quoted near the end of the session at 4.24% after opening at 4.18%.
The two-year Treasury note was quoted near the end of the session at 0.82% after opening at 0.77%.
The Municipal Market Data triple-A scale yielded 2.79% in 10 years and 3.65% in 20 years yesterday, following levels of 2.80% and 3.66% on Tuesday. The scale yielded 3.99% in 30 years yesterday, versus 4.00% on Tuesday.
Tuesday’s triple-A muni scale in 10 years was at 85.4% of comparable Treasuries and 30-year munis were at 95.5%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 99.3% of the comparable London Interbank Offered Rate.
In the new-issue market yesterday, Ventura County, Calif., competitively sold $131 million of tax and revenue anticipation notes to Goldman, Sachs & Co., with an effective rate of 0.39%.
The Trans mature in 2011, with a 2% coupon. The yield was not available by press time.
The credit is rated MIG-1 by Moody’s Investors Service and SP-1-plus by Standard & Poor’s.
Fulton County, Ga., competitively sold $120 million of general fund tax anticipation notes to Wells Fargo Securities with a net interest cost of 0.28%.
The Tans mature in Dec. 2010, with a 2% coupon. They were not formally re-offered.
The credit is rated MIG-1 by Moody’s and F1-plus by Fitch Ratings.
JPMorgan priced $75 million of revenue bonds for the New Hampshire Health and Education Facilities Authority.
The bonds mature in 2035 and 2040, yielding 5.04% and 5.15%, both with 5% coupons.
The 2040 bonds are callable at par in 2020 and those maturing in 2035 are callable at par in 2015.
The credit is rated A-plus by both Standard & Poor’s and Fitch.
Washington State competitively sold $68.1 million of certificates of participation to Morgan Stanley in two series.
The $43.6 million Series A was sold to Morgan Stanley with a true interest cost of 3.93% and mature from 2011 through 2030.
Yields range from 0.60% with a 2% coupon in 2011 to 4.55% with a 4.5% coupon in 2030. The COPs are callable at par in 2020.
Certificates from the $24.5 million Series B were sold with a TIC of 2.42% and mature from 2011 through 2020.
Yields range from 0.40% with a 2% coupon in 2011 to 3.50% priced at par in 2020. The COPs are not callable.
The credit is rated Aa2 by Moody’s.
Siebert Brandford Shank & Co. priced $40.3 million of sales and use tax contractual obligations for the Harris County, Tex., Metropolitan Transit Authority.
The bonds mature from 2011 through 2022, with yields ranging from 0.55% with a 4% coupon in 2011 to 3.54% with a 5% coupon in 2022.
The bonds, which are callable at par in 2020, are rated Aa2 by Moody’s and AA by Standard & Poor’s.
Trades reported by the Municipal Securities Rulemaking Board yesterday showed some gains.
A dealer sold to a customer taxable Pennsylvania Build America Bonds 4.6s of 2023 at 4.91%, down one basis point from where they were sold Tuesday. A dealer bought from a customer District of Columbia 4.5s of 2037 at 4.58%, down one basis point from where they were sold Tuesday.
Bonds from an interdealer trade of California 5s of 2032 yielded 5.13%, even with where they were sold Tuesday. A dealer sold to a customer New York City Municipal Water Finance Authority 4.75s of 2030 at 4.34%, one basis point lower than where they were sold Tuesday.
A dealer sold to a customer taxable Illinois 5.1s of 2033 at 5.93%, even with where they were sold Tuesday.
A dealer sold to a customer Florida State Board of Education 5.5s of 2038 at 4.20%, one basis point lower than where they were sold Tuesday.
In economic data released yesterday, pending home sales rose 6.0% to a reading of 110.9 in April from a revised 7.1% increase to 104.6 in March.
Thomson Reuters’ poll of economists had predicted a 108.0 reading.
Priti Patnaik contributed to this column.
