The municipal market was firmer Tuesday amid moderate secondary trading activity.
“We’re seeing some gains,” a trader in New York said. “We’re probably better anywhere from three to five basis points right now.”
The Municipal Market Data triple-A 10-year scale fell five basis points Tuesday to 3.28%, the 20-year dropped five basis points to 4.52%, and the scale for 30-year bonds declined four basis points to 4.86%.
In the daily MMD commentary, Randy Smolik wrote that the expectation of modest primary scheduling through March emboldened underwriters to make strong bids on a wide array of competitive deals.
“Customers waiting for a buying opportunity capitulated today, reaching for prime quality paper throughout most of the curve,” he wrote. “Some attractive block-selling in the 15-year range didn’t discourage more aggressive bidding later in the session. Treasuries provided a steady to firmer market backdrop.”
Tuesday’s triple-A muni scale in 10 years was at 90.9% of comparable Treasuries and 30-year munis were at 104.3% according to MMD.
Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 110.0% of the comparable London Interbank Offered Rate.
Treasuries showed losses Tuesday. The benchmark 10-year note finished at 3.63% after opening at 3.61%.
The 30-year bond finished at 4.69% after opening at 4.67%. The two-year note finished at 0.86% after also opening at 0.84%.
In the new-issue market, Illinois held its $3.7 billion bond issue, originally scheduled to sell Thursday, until next week so investors can review Gov. Pat Quinn’s budget proposal, which is expected to be released Wednesday.
In Tuesday’s market, the Florida State Board of Education competitively sold $344.7 million of public education capital outlay refunding bonds to Bank of America Merrill Lynch with a true interest cost of 3.27%
The bonds mature from 2012 through 2023, with yields ranging from 0.52% with a 5% coupon in 2012 to 4.10% with a 4% coupon in 2022.
Bonds maturing in 2015, 2017, 2021, and 2023 were sold but not available. The bonds are callable at par in 2020.
The credit is rated Aa1 by Moody’s Investors Service and AAA by Standard & Poor’s and Fitch Ratings.
Washington’s Bellevue School District No. 405 competitively sold $197 million of unlimited-tax GO bonds to JPMorgan with a TIC of 4.29%.
The bonds mature in 2012 and from 2015 through 2030, with yields ranging from 1.96% with a 5% coupon in 2015 to 4.70% with a 5% coupon in 2030. Bonds maturing in 2012 were decided via sealed bid.
Bonds maturing in 2017, 2023, 2027, and 2028 were not formally re-offered. The bonds are callable at par in 2021.
The credit is rated Aaa by Moody’s and AA-plus by Standard & Poor’s.
Goldman, Sachs & Co. priced $71.8 million of tax-exempt and taxable debt for Alabama’s Birmingham Commercial Development Authority.
Bonds from the $58.3 million tax-exempt Series A mature from 2023 through 2031, with a term bond in 2041. Yields range from 4.73% with a 5% coupon in 2023 to 5.85% with a 5.5% coupon in 2041. The bonds are callable at par in 2020.
Bonds from the $13.5 million taxable Series B mature in 2022 and are priced at par to yield 6.00%. The bonds are callable at par in 2020.
The credit is rated Aa2 by Moody’s and an equivalent AA by Standard & Poor’s and Fitch.
In economic data released Tuesday, retail sales increased by a seasonally adjusted 0.3% in January as sales excluding autos also increased 0.3%, both below economists’ estimates.
The January retail sales increase was the smallest since June when total retail sales fell 0.3%.
Economists expected sales would increase 0.5% and sales excluding autos would increase 0.6%, according to the median estimate from Thomson Reuters.
Import prices rose 1.5% in January, and for the first time since July 2008 the index advanced at least 1.0% for four consecutive months, while export prices increased 1.2% in the month.
Import prices were up 4.3% over the past three months — the largest three-month gain since a 5.6% advance in June 2009.
The increase in January was attributed to higher fuel and nonfuel prices and was higher than the 0.8% increase projected by economists and reported by Thomson Reuters.
Business inventories increased 0.8% in December, while sales jumped 1.1%.
Inventories for November were revised higher to an increase of 0.4% from a 0.2% gain in November. November sales rose 1.4%.
Economists expected inventories would increase 0.7%, according to the median estimate from Thomson Reuters.
The Empire State Manufacturing Survey showed “conditions for New York manufacturers continued to improve in February,” the Federal Reserve Bank of New York reported Tuesday.
The general business conditions index gained to 15.43 in the month from 11.92 in January. Economists surveyed by Thomson had expected the index would grow to 15.00.
