The municipal market remained unchanged to slightly firmer yesterday, as the Alabama Public School and College Authority came to market with a $680 million refunding.
“We’re seeing a little bit of firmness here and there, but it’s quiet overall,” a trader in San Francisco said. “I’m not sure if you can really say it’s definitively better, but there’s certainly a firmer tone. On the whole, I guess I’d say we’re mostly unchanged, with some gains in spots. I think mostly it’s that intermediate part of the curve where you’re seeing those gains — around the 10-year, 15-year mark. The very short end and the very long end, I’m not seeing any movement at all.”
“There is not much of anything going on in the secondary,” a trader in New York said. “It’s a little bit stronger than yesterday; a couple of bids are being hit. But it seems like kind of a stalemate right now.”
“The secondary is pretty quiet,” a trader in New Jersey added. “People are generally focused on the new issues.”
In the new-issue market yesterday, Morgan Stanley priced $680 million of refunding bonds for the Alabama authority in three series. That was roughly $100 million less than the $785 million the issuer had planned to refund. Bonds from the $467.3 million Series A mature from 2012 through 2019, with term bonds in 2024 and 2029.
Yields range from 2.02% with a 5% coupon in 2012 to 4.70% with a 5% coupon in 2029. The bonds are callable at par in 2019. Bonds from the $175.0 million Series B mature from 2010 through 2019, with yields ranging from 2.02% with a 5% coupon in 2012 to 4.00% with a 5% coupon in 2019. Bonds maturing in 2010 and 2011 were not formally re-offered. The bonds are not callable. Bonds from the $37.8 million Series C mature from 2010 through 2019, with term bonds in 2024 and 2029. Yields range from 2.02% with a 3% coupon in 2012 to 4.70% with a 5% coupon in 2029. Bonds maturing in 2010 and 2011 were not formally re-offered. The bonds are callable at par in 2019. The credit is rated Aa2 by Moody’s Investors Service and AA by both Standard & Poor’s and Fitch Ratings.
Goldman, Sachs & Co. priced $527 million of revenue bonds for the Pennsylvania Turnpike Commission. Pricing information was not available by press time.
JPMorgan priced for investors $370.0 million of Dormitory Authority of the State of New York revenue bonds for Mount Sinai School of Medicine. The bonds mature from 2016 through 2029, with term bonds in 2034 and 2039. Yields range from 3.91% with a 4% coupon in 2016 to 5.37% with a 5.125% in 2039. The bonds, which are callable at par in 2019, are rated A3 by Moody’s and A-minus by Standard & Poor’s.
Loop Capital Markets priced $338.0 million of general obligation bonds for Cook County, Ill. Bonds from the $235.1 million series C refunding mature from 2010 through 2023, with yields ranging from 0.92% with a 3.5% coupon in 2010 to 4.23% with a 5% coupon in 2023. The bonds are callable at par in 2019.
Bonds from the $96.4 million Series D mature from 2011 through 2021, with yields ranging from 1.35% with a 3.25% coupon in 2011 to 4.09% with a 5% coupon in 2021. The bonds are callable at par in 2019. The deal also contained a taxable $6.5 million Series E, which matures in 2010 and was decided via sealed bid. These bonds are not callable. The credit is rated Aa3 by Moody’s, AA by Standard & Poor’s, and AA-minus by Fitch.
Also, Citi priced $330.7 million of hospital revenue and refunding bonds for the Michigan State Hospital Finance Authority. Pricing information was not available by press time.
The Treasury market showed some losses yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.34%, finished at 3.38%. The yield on the two-year note finished at 0.96%, after opening at 0.92%. And the yield on the 30-year bond, which opened at 4.16%, finished at 4.20%.
Also, yesterday’s Municipal Market Data triple-A scale yielded 3.03% in 10 years and 3.73% in 20 years, following levels of 3.05% and 3.73%, respectively, Tuesday. The scale yielded 4.08% in 30 years yesterday, matching Tuesday’s level of 4.08%.
As of Tuesday’s close, the triple-A muni scale in 10 years was at 91.6% of comparable Treasuries, according to MMD. Additionally, 30-year munis were 98.1% of comparable Treasuries. Also, as of Tuesday’s close, 30-year tax-exempt triple-A rated general obligation bonds were at 100.7% of the comparable London Interbank Offered Rate.
Also, Tuesday, the California State Public Works Board completed the first day of a two-day retail order period ahead of this week’s $820 million lease revenue bond sale. According to a press release from the state Treasurer’s office, $67.5 million of bonds were sold to retail Tuesday, more than a quarter of the $263.2 million of bonds offered to retail. Preliminary yields ranged from 1.47% for the 2010 maturity to 5.50% for the 2029 maturity.
Elsewhere in the new-issue market yesterday, JPMorgan priced $250 million of hospital revenue bonds for Riverton, Utah. The bonds mature in 2013, 2015, and from 2017 through 2020, with term bonds in 2036 and 2041. Yields range from 2.43% with a 5% coupon in 2013 to 5.13% with a 5% coupon in 2041. The bonds, which are callable at par in 2019, are rated Aa1 by Moody’s and AA-plus by Standard & Poor’s.
After postponing its $603 million refunding component due to market conditions Tuesday, Maryland competitively sold $200 million of new-money GO bonds yesterday. The state sold a $141 million component to JPMorgan, with a true interest cost of 2.85%. They also sold a $58 million component to Barclays Capital, with a TIC of 4.68%. Pricing information was not available by press time.
Also, The Bond Buyer’s one-year note index yesterday reached an all-time low of 0.54%. The index began on July 12, 1989.
Patrick McGee contributed to this column.