The municipal market was slightly firmer Tuesday as the Metropolitan Washington Airports Authority brought $446.2 million of long-term debt to the primary and Illinois competitively sold $1.3 billion of notes.
Long-term muni yields closed to within one basis point of matching long Treasuries.
“It is a relatively strongly market,” a trader in New York said. “The secondary is bumping against positions as traders find it difficult to replace paper. The strength of the market is in the short and intermediate range, but flow remains spotty.”
A trader in Los Angeles said that while the market “seems to have some buyers back,” he is “not necessarily seeing much change.”
“If anything, we may be just a touch better, maybe one or two basis points,” the trader said. “I am hoping that we continue to improve over this week. Seems like in the last week or so, July reinvestments have come off the sidelines and there has been some activity.”
In the new-issue market Tuesday, Barclays Capital priced $446.2 million of revenue bonds for the MWAA in two series.
Bonds from the $215.0 million new-money Series A mature from 2011 through 2030, with term bonds in 2035 and 2039. Yields range from 0.52% with a 3% coupon in 2011 to 4.67% with a 5% coupon in 2039. The bonds are callable at par in 2020.
Bonds from the $231.2 million refunding Series B, which are subject to the alternative minimum tax, mature from 2011 through 2027, with yields ranging from 1.27% with a 5% coupon in 2011 to 4.87% with a 5% coupon in 2027. The bonds are callable at par in 2020.
The credit is rated Aa3 by Moody’s Investors Service, AA-minus by Standard & Poor’s, and AA by Fitch Ratings.
In the note market, cash-strapped Illinois competitively sold $1.3 billion of general obligation certificates to Bank of America Merrill Lynch in three series.
Notes from the $500 million series mature in April 2011, yielding 1.875% with a 3% coupon.
Notes from a $400 million series mature in May 2011 and yield 2.00% with a 3% coupon.
And notes from another $400 million series mature in June 2011, yielding 2.125% with a 3% coupon.
The credit is rated SP-1 by Standard & Poor’s.
The Treasury market was nearly flat Tuesday. The benchmark 10-year note finished at 2.95% after opening at 2.96%. The 30-year bond finished at 3.98% after also opening at 3.98%. The two-year note finished at 0.59% after also opening at 0.59%.
The Municipal Market Data triple-A scale yielded 2.61% in 10 years and 3.68% in 20 years Monday, compared to levels of 2.60% and 3.68% Friday. The scale yielded 3.97% in 30 years Monday, matching Friday.
Tuesday’s triple-A muni scale in 10 years was at 87.5% of comparable Treasuries and 30-year munis were at 99.7%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 105.6% of the comparable London Interbank Offered Rate.
Elsewhere in the new-issue market Tuesday, Wells Fargo Securities priced $220.9 million of water and sewer system revenue bonds for the Jacksonville, Fla., Electric Authority in three series.
Bonds from the $105.8 million series mature from 2016 through 2024, with term bonds in 2026, 2027, and 2039. Yields range from 2.38% with a 5% coupon in 2016 to 4.48% with a 5% coupon in 2039. The bonds are callable at par in 2020, except bonds maturing in 2020, which are not callable.
Bonds from a $98.5 million series mature from 2010 through 2030, with a term bond in 2036. Yields range from 0.43% with a 3% coupon in 2010 to 4.86% with a 4.75% coupon. The bonds are callable at par in 2015.
Bonds from a $16.7 million series mature from 2013 through 2022, with yields ranging from 1.25% with a 3% coupon in 2013 to 3.64% with a 5% coupon in 2022. The bonds are callable at par in 2020, except bonds maturing in 2020, which are not callable.
The credit is rated Aa2 by Moody’s, AA-minus by Standard & Poor’s, and AA by Fitch.
JPMorgan priced for retail investors $507.3 million of aviation revenue bonds for Miami-Dade County.
The bonds mature from 2013 through 2030, with term bonds in 2035 and 2041. Yields range from 1.73% with a 2.25% coupon in 2013 to 5.00% priced at par in 2035. Bonds maturing in 2023, 2024, from 2026 through 2029, and in 2035 and 2041 were not offered during the retail order period. The bonds are callable at par in 2020.
Bonds maturing from 2019 through 2022 and in 2025, 2030, and 2035 were insured by Assured Guaranty Municipal Corp. The underlying credit is rated A2 by Moody’s, A-minus by Standard & Poor’s, and A by Fitch.
In economic data released Tuesday, housing starts slipped 5.0% to 549,000 in June as home building permits increased 2.1% to 586,000.
The level of housing starts reached an eight-month low while the increase in building permits reversed two straight months of declines.
Building permits rose in the Northeast and West, but fell in the South and Midwest. Permits for single-family homes fell to 421,000. Total building permits for May were unrevised at 574,000.
Housing starts fell in all four U.S. regions. Single-family housing starts fell to 454,000. May housing starts were revised lower to 578,000.
Economists polled by Thomson Reuters expected 580,000 housing starts and 570,000 building permits for the month, according to the median estimate.
Priti Patnaik contributed to this column.
