Market Close: Colorado Sells TRANs in Quiet Market

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The municipal bond market was quiet on Monday with only a big competitive note sale from the Centennial State to break the silence. Few deals are scheduled for this holiday-shortened week as total long-term issuance is forecast to plunge to about $28 million from $5 billion last week.

"It is very typical for last week to be a wind down week and this week to be all but dead," said a Virginia trader. "There might be a few deals that are being forced through the system."

Prices of high-grade municipal bonds were mixed, according to Municipal Market Data.

 

Primary Market

The $245 million Colorado tax and revenue anticipation note sale was won by JPMorgan Securities with a bid of 1.75% and a $1,952,650 premium, an effective rate of 0.1002%. The TRANs are rated MIG1 by Moody's Investors Service and SP1-plus by Standard & Poor's. RBC Capital Markets was the financial adviser on the sale.

Looking ahead to next month, the Dormitory Authority of the State of New York has scheduled a $1 billion bond sale in a negotiated transaction for January.

DASNY plans to offer $1 billion of general purpose state personal income tax revenue bonds. A group including Barclays, Citigroup and Rice Financial Products is slated to price the bonds.

Proceeds of the sale will be used to refund various outstanding issues.

Last week, the Dorm Authority came to market with about $495 million of personal income tax revenue bonds. Bank of America Merrill Lynch priced the tax-exempt and taxable deal for institutions after it held a one-day order period for retail investors. The bonds were issued for general purposes.

Meanwhile, investors will be looking out for any fresh paper post-holiday, traders said.

"Early in the new year it will be a heavy re-investment period," said the Virginia trader. "I am very optimistic about the market in the New Year because the demand is there, there will be more cash in the system and I am expecting the Treasury to be maybe a bit choppy, but flat and stable. It is hard to put a negative spin on it."

Also in January, Washington state will offer about $941 million of bonds in four separate competitive sales. The sales on Jan. 21 will consist of $464.52 million various purpose general obligation refunding bonds, $270 million various purpose GOs, $206 million motor vehicle fuel tax GOs, and $58 million taxable GOs.

Miami-Dade County, Fla., will put out for bid on Jan. 6 three separate competitive sales of general obligation bonds totaling $372 million. Proceeds from the sales will be used for parks, public health and its "Building Better Communities" program.

 

Secondary Market

High-grade municipal bond prices were barely mixed on Monday. The yield on the benchmark 10-year general obligation dipped one basis point to 2.07%, from 2.08% on Friday. While the yield on 30-year GOs stayed the same as Friday at 2.92%, according to the final read of Municipal Market Data's triple-A scale.

Treasury prices were mixed on Monday, with the two-year note yield increased one basis point to 0.65% from 0.64% on Friday. The 10-year yield decreased one basis point to 2.16% from 2.17% while the 30-year dropped two basis points to 2.75%, from 2.77% on Friday.

On Monday, the 10-year muni-to-Treasury ratio was calculated at 95.7% versus 95.9% on Thursday; the 30-year muni to Treasury ratio was at 106.1%, compared with 105.4% on Friday.

 

MSRB: Previous Session's Activity

The Municipal Securities Rulemaking Board reported 30,561 trades on Friday on volume of $7.476 billion.

Most active on Friday, based on the number of trades, were the New Jersey Transportation Trust Fund Authority transportation program bonds, Series AA 4 1/4s of 2044, which traded 205 times with an average price of 99.459 and an average yield of 4.256%.

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