The municipal market was unchanged to slightly firmer Thursday, as another snowstorm battered the Northeast and helped precipitate a light slate of secondary trading.
“It’s really quiet, with a hint of a firmness,” a trader in New York said. “It’s hard to call it anything but unchanged, because there’s so little activity.”
A trader in Los Angeles was less circumspect. He said the market was a bit better.
“There may not be a ton going on, but we’re definitely firmer by a basis point or two,” the trader said.
The Municipal Market Data triple-A 10-year scale dipped two basis points Thursday to 3.34%, the 20-year scale declined one basis point to 4.58%, and the scale for 30-year bonds fell two basis points to 4.80%.
In the daily MMD commentary, Randy Smolik wrote that dealers are still selling the fact that munis should not be at the current historically attractive ratios to taxables.
“Unless proven wrong by heavier selling or a surge in the primary calendar, they continue to have conviction to support levels,” Smolik wrote.
Thursday’s triple-A muni scale in 10 years was at 98.5% of comparable Treasuries and 30-year munis were at 105.0%, according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 111.9% of the comparable London Interbank Offered Rate.
Treasuries showed some gains Thursday. The benchmark 10-year note finished at 3.39% after opening at 3.41%. The 30-year bond finished at 4.57% after opening at 4.58%. The two-year note finished at 0.59% after opening at 0.62%.
The Treasury Department auctioned $29 billion of seven-year notes, with a 2 5/8% coupon, a 2.744% high yield, and a price of 99.25. The bid-to-cover ratio was 2.85. Federal Reserve banks bought $577.9 million for their own accounts in exchange for maturing securities.
In Thursday’s new-issue market, the Port Authority of New York and New Jersey competitively sold $300 million of consolidated bonds to JPMorgan with a true interest cost of 5.19%. The debt matures from 2030 through 2033, with term bonds in 2036 and 2041. Yields range from 4.88% with a 5.25% coupon in 2030 to 5.20% with a 5% coupon in 2041. The bonds are callable at par in 2021. The credit is rated Aa2 by Moody’s Investors Service and AA-minus by Standard & Poor’s and Fitch Ratings.
Morgan Stanley priced $275 million of revenue bonds for the Dormitory Authority of the State of New York, on behalf of Columbia University. They mature from 2017 through 2023, with split-term maturities in 2041. Yields range from 2.36% with a 4% coupon in 2017 to 4.875% with a 5% coupon in 2041.
The bonds are callable at par in 2021, except for those maturing in 2021, which are not callable.
The credit is rated triple-A by Moody’s and Standard & Poor’s.
Cobb County, Ga., competitively sold $62 million of short-term construction notes to Barclays Capital with a net interest cost of 0.38%. The notes mature in December 2011 with a 1.5% coupon and were not formally re-offered. The credit is rated MIG-1 by Moody’s.
Goldman, Sachs & Co. priced $49.4 million of revenue refunding bonds for the Illinois Finance Authority. The bonds mature from 2012 through 2027, with yields ranging from 1.52% with a 4% coupon in 2012 to 5.88% with a 5.5% coupon in 2027. The bonds, which are callable at par in 2021, are rated A3 by Moody’s, A-minus by Standard & Poor’s, and A by Fitch.
Wayland, Mass., competitively sold $42.4 million of municipal purpose loan GOs to Bank of America Merrill Lynch with a TIC of 3.96%. The bonds mature from 2012 through 2031, with term bonds in 2033 and 2036.
Yields range from 1.57% with a 5% coupon in 2015 to 2.52% with a 4% coupon in 2018. Bonds maturing from 2012 through 2014 and from 2019 through 2036 were not formally re-offered.
The bonds, which are callable at par in 2021, are rated Aaa by Moody’s.
Livingston Township, N.J., competitively sold $29 million of bond anticipation notes to Morgan Stanley with a TIC of 0.65%. The Bans mature in Feb. 2012 with a 1.5% coupon and were not formally re-offered.
In economic data released Thursday, initial jobless claims surged by 51,000 to a three-month-high of 454,000 during the week ended Jan. 22, as new filings delayed by bad weather poured in from the Southeast.
Continuing claims increased 94,000 to 3.991 million the week ended Jan. 15. Economists expected 405,000 initial claims and 3.85 million continuing claims, according to Thomson Reuters.
Durable goods orders unexpectedly declined in December, dropping 2.5% to $191 billion, as orders for big-ticket nonmilitary aircraft sharply decreased.
Excluding transportation equipment, which can fluctuate greatly from month to month, durable goods orders grew 0.5% to $151.8 billion. Economists forecast that durable goods would rise 1.5% and orders excluding transportation would increase 0.8%, according to Thomson Reuters.
Pending home sales climbed 2.0% to a December reading of 93.7 as the expanding economy and historically low borrowing costs spurred buyers.
Economists predicted a 1.0% increase for the index, which has a base year of 2001. The winter months are generally the lightest time of the year for home purchases.
