The municipal market was slightly firmer Wednesday amid moderate secondary trading activity, as Illinois’ Metropolitan Pier and Exposition Authority came to market with $1.1 billion of debt.
“We’re actually feeling a little bit better right now,” a trader in New York said. “Treasuries are doing a little better and we’re following. There’s a decent amount of activity in the secondary right now, particularly in high-grades, [and] we’re probably better by about two basis points or so.”
In the new-issue market, Morgan Stanley priced the MetPier debt in multiple series.
Bonds from the $198.2 million Series A mature in 2050, yielding 4.98% with a 5.5% coupon. The bonds are callable at par in 2020 and are uninsured.
Bonds from the $400.0 million Series B mature in 2050, yielding 5.12% with a 5% coupon. The remainder of this series contains capital appreciation bonds that mature in 2026, 2027, and from 2043 through 2047. The capital appreciation bonds are not callable, while the 2050 bonds are callable at par in 2020. All of the bonds are insured by Assured Guaranty Municipal Corp.
Bonds from the $524.8 million Series B2 contain three split maturities in 2050, yielding 5.20% with a 5% coupon, 5.23% with a 5.25% coupon, and 5.23% with a 5.2% coupon. The bonds are callable at par in 2020, and are uninsured.
The credit is rated A2 by Moody’s Investors Service, AAA by Standard & Poor’s, and AA-minus by Fitch Ratings.
The Municipal Market Data triple-A scale yielded 2.43% in 10 years Wednesday, down six basis points from Tuesday’s 2.49%, while the 20-year scale dropped two basis points to 3.35%, down from Tuesday’s 3.36%. The scale for 30-year debt yielded 3.73%, one basis point lower than Tuesday’s 3.74%.
“There’s been a bit of an about-face, at least for today,” a trader in Los Angeles said. “You had that ADP report that was helping drive Treasury yields down, and that’s helped us out a bit. Plus, with a couple of those refunding postponements you saw in Georgia and Pennsylvania, you’ve seen some more buying today.”
Private-sector employment decreased 39,000 on a seasonally adjusted basis in September, compared to August, according to the latest ADP National Employment Report released Wednesday.
The Treasury market posted gains Wednesday. The benchmark 10-year note was quoted recently at 2.40% after opening at 2.47%. The 30-year bond finished at 3.67% after opening at 3.75%. The two-year note finished at 0.39% after opening at 0.40%.
Wednesday’s triple-A muni scale in 10 years was at 102.1% of comparable Treasuries and 30-year munis were at 102.2%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 113.0% of the comparable London Interbank Offered Rate.
Elsewhere Wednesday in the new-issue market, Bank of America Merrill Lynch priced $1.8 billion of power supply revenue bonds for retail investors on behalf of the California Department of Water Resources.
The bonds will be priced for institutional investors Thursday.
The bonds mature from 2011 through 2019, with yields ranging from 0.88% with a 2% coupon in 2012 to 2.75% with a 5% coupon in 2019. The bonds are not callable.
The bonds are rated Aa3 by Moody’s, AA-minus by Standard & Poor’s, and AA by Fitch.
Morgan Stanley priced $292.6 million of revenue bonds for the California Statewide Communities Development Authority.
The bonds mature from 2011 through 2020, with term bonds in 2030 and 2040. Yields range from 1.58% with a 3% coupon in 2012 to 5.00% priced at par in 2040. Bonds maturing in 2011 were not formally re-offered.
The bonds, which are callable at par in 2020, are rated A-plus by Standard & Poor’s and AA-minus by Fitch.
Bank of America Merrill priced $190 million of facility revenue bonds for the Delaware Economic Development Authority.
The bonds mature in 2045, yielding 5.375% priced at par.
The bonds, which are callable at par in 2020, are rated Baa3 by Moody’s.
Bank of America priced $150 million of taxable wastewater system revenue Build America Bonds for California’s East Bay Municipal Utility District.
The bonds mature in 2032, 2033, and 2040, yielding 5.026%, 5.076%, and 5.176%, all priced at par, or 3.27%, 3.30%, and 3.36% after the 35% federal subsidy.
The bonds were priced to yield 135, 140, and 150 basis points over the 30-year Treasury yield, and contain a make-whole call at Treasuries plus 22.5 basis points.
The credit is rated Aa2 by Moody’s, AAA by Standard & Poor’s, and AA-plus by Fitch.
