Munis Firmer; Secondary Activity Moderate

The municipal market was firmer yesterday amid light to moderate secondary trading activity.

“The market is kind of moving. It’s doing alright,” a New York trader said.

“The only thing is, on the long end, in the 2030s and ’40s, there is not too much activity out there,” the trader said. “It seems like buyers are a little hesitant getting that further out. With the yields trading where they are right now, there is no reason why they should not be buying. I can’t tell why it is so limited out there. The market has gotten quite cheap out there. Except for the long end, the market is going to be up maybe four or five basis points.”

A trader in Los Angeles said the market “is feeling strong,” with “better buyers and sellers out there.”

“We are certainly going to outperform the Treasury markets right now, with the Treasuries being off a little bit,” the trader said. “And it just seems as though there is still good July reinvestment money being put to work. There is not a lot of paper around, not a lot in the secondary market. It is a light week for the new-issue market. More demand than supply at this point.”

The Treasury market mostly showed some losses yesterday. The benchmark 10-year note was quoted near the end of the session at 2.99% after opening at 2.93%. The 30-year bond was quoted near the end of the session at 3.97% after opening at 3.89%. The two-year note was quoted near the end of the session at 0.64% after opening at 0.61%.

The Municipal Market Data triple-A scale yielded 2.67% in 10 years and 3.70% in 20 years yesterday, following levels of 2.75% and 3.72% Tuesday. The scale yielded 3.99% in 30 years yesterday, following 4.00% Tuesday.

Tuesday’s triple-A muni scale in 10 years was at 93.9% of comparable Treasuries and 30-year munis were at 102.8%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 107.8% of the comparable London Interbank Offered Rate.

In the new-issue market yesterday, top-rated Missouri competitively sold $105.7 million of debt to JPMorgan in three ­series.

Bonds from the $81.5 million series of state water pollution control GO refunding bonds mature from 2012 through 2022, with 4% and 5% coupons.

Bonds from the $9.1 million series of fourth state building GO refunding bonds mature from 2012 through 2022, with 4% and 5% coupons.

Bonds from the $15.2 million series of stormwater control GO refunding bonds mature from 2012 through 2022, with 4% and 5% coupons.

Pricing information on the deal was not available by press time.

Morgan Stanley priced $61.2 million of special purpose revenue bonds for the Hawaii Pacific Health Obligated Group.

The bonds mature from 2014 through 2020, with term bonds in 2030 and 2040. Yields range from 3.35% with a 5% coupon in 2014 to 5.90% with a 5.75% coupon in 2040.

The bonds are callable at par in 2020. They are rated A3 by Moody’s Investors Service, BBB-plus by Standard & Poor’s, and A-minus by Fitch Ratings.

Monroe County, N.Y., competitively sold $84.7 million of GO public improvement bonds to Citi with a true interest cost of 3.95%.

The bonds mature from 2011 through 2030, with yields ranging from 0.75% with a 3% coupon in 2011 to 4.40% with a 4.375% coupon in 2030.

The bonds are callable at par in 2020. They are backed by Assured Guaranty Corp.

JPMorgan priced $24 million of mortgage purchase bonds for the Maine State Housing Authority.

The bonds mature from 2011 through 2024, with term bonds in 2027. Yields range from 0.60% in 2011 to 4.25% in 2027, all priced at par.

The bonds, which are callable at par in 2020, are rated Aa1 by Moody’s and AA-plus by Standard & Poor’s.

The Regional Transportation Authority of Illinois has decided to push its sale of $140 million of taxable working cash-flow notes — originally scheduled for this week — to July 20 to allow the market time to digest Illinois’ issue of $900 million of taxable GO Build America Bonds slated for Wednesday.

The notes carry a final maturity in 24 months, and a piece of the state’s BAB deal matures in 2011 and 2012. The finance team is watching the market, however, and may go ahead and price the notes late next week after the Illinois sale.

If the RTA sticks with the July 20 date, it would enter the market just ahead of Illinois’ $1.3 billion sale of GO certificates scheduled for the next day.

Ahead of the RTA deal, all three rating agencies downgraded the system over the pressures posed by faltering sales tax collections and its exposure to the state’s liquidity crisis that has resulted in delayed aid payments.

The RTA is now rated AA-minus with a negative outlook by Fitch, AA and stable by Standard & Poor’s, and Aa3 and stable by Moody’s.

Bank of America Merrill Lynch is senior manager, Acacia Financial Group is financial adviser, and Chapman and Cutler LLP is bond counsel.

Trades reported by the Municipal Securities Rulemaking Board yesterday showed some gains. A dealer sold to a customer Wake County, N.C., 5s of 2023 at 3.10%, down three basis points from where they were sold Tuesday. Bonds from an interdealer trade of taxable California BABs 7.95s of 2036 yielded 7.41%, down one basis point from where they were sold Tuesday.

A dealer sold to a customer Pennsylvania 5s of 2026 at 3.25%, two basis points lower than where they were sold Tuesday. A dealer sold to a customer Golden State Tobacco Securitization Corp. 4.5s of 2027 at 5.85%, down three basis points from where they were sold Tuesday. A dealer sold to a customer taxable New York State BABs 5.84s of 2040 at 5.78%, one basis point lower than where they traded Tuesday.

The economic calendar was light yesterday.

Yvette Shields and Priti Patnaik contributed to this column.

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