NEW YORK – The California municipal market was slightly firmer Wednesday amid light to moderate secondary trading activity, as a late Treasury rally left long-term muni yields higher than long Treasuries.
A trader in Los Angeles said that trading activity began to pick up Tuesday, with a great number of investors “taking a lot of bonds out of the market,” which helped push yields lower Tuesday, continuing into Wednesday.
“The front end of the muni curve continued to grind down to lower yields yesterday,” the trader said.
In the new-issue market Wednesday, JPMorgan priced $504.9 million of aviation revenue bonds for Miami-Dade County, Fla.
The bonds, which were priced for retail investors Tuesday, mature from 2013 through 2030, with term bonds in 2035 and 2041.
Yields range from 1.68% with a 2.25% coupon in 2013 to 5.22% with a 5% coupon in 2041. The bonds are callable at par in 2020.
Bonds maturing from 2019 through 2025 and in 2030 and 2035 were insured by Assured Guaranty Municipal Corp. The underlying credit is rated A2 by Moody’s, A-minus by Standard & Poor’s, and A by Fitch.
The Treasury market showed gains Wednesday. The benchmark 10-year note was quoted recently at 2.87% after opening at 2.95%. The 30-year bond was recently quoted at 3.88% after opening at 3.98%. The two-year note was recently quoted at 0.57% after opening at 0.58%.
The Municipal Market Data triple-A scale yielded 2.57% in 10 years and 3.67% in 20 years Wednesday, compared to levels of 2.58% and 3.68% Tuesday. The scale yielded 3.97% in 30 years Wednesday, matching 3.97% Tuesday.
Wednesday’s triple-A muni scale in 10 years was at 89.9% of comparable Treasuries and 30-year munis were at 102.6%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 108.8% of the comparable London Interbank Offered Rate.
In the California new-issue market Wednesday, JPMorgan priced $250 million of taxable electric revenue bonds for California’s Sacramento Municipal Utility District.
The bonds mature in 2036 and were priced to yield 225 basis points over the 30-year Treasury.
The bonds, which contain an unspecified make-whole call, are rated A1 by Moody’s, A-plus by Standard & Poor’s, and A by Fitch.
The economic calendar was light Wednesday.
Previous Session's Activity
The most actively traded security in the state yesterday was taxable Monrovia, Calif., 6.625s of 2020, which traded 137 times at a high of 100.954 and a low of 98.704.
