NEW YORK – The California municipal market was firmer Thursday amid moderate secondary trading activity as the California Department of Water Resources led the primary with nearly $2 billion of new issuance.
“We’re definitely a bit better,” a trader in Los Angeles said. “I think a lot of the gains we’re seeing are mostly situated on the short end of the curve. We might be up five, six, even eight basis points on the really short end. Past that, we’re maybe two basis points better on the whole. But either way, we’re seeing some gains today, which I don’t think a lot of people would have predicted at the start of the week.”
In the new-issue market Thursday, Bank of America Merrill Lynch priced $1.8 billion of power supply revenue bonds on behalf of the California Department of Water Resources.
The bonds mature from 2011 through 2020, with yields ranging from 0.83% with a 2% coupon in 2012 to 2.94% with a 5% coupon in 2020. The bonds are not callable.
The bonds are rated Aa3 by Moody’s Investors Service, AA-minus by Standard & Poor’s, and AA by Fitch Ratings.
The Municipal Market Data triple-A scale yielded 2.35% in 10 years Thursday, down eight basis points from Wednesday’s 2.43%, while the 20-year scale dropped three points to 3.32% from Wednesday’s 3.35%. The scale for 30-year debt yielded 3.72%, one basis point lower than Wednesday’s 3.73%.
The Treasury market was mixed Thursday. The benchmark 10-year note was quoted recently at 2.39% after opening at 2.40%.
The 30-year bond was quoted recently at 3.72% after opening at 3.67%. The two-year note was quoted recently at 0.36% after opening at 0.38%.
In economic data released Thursday, initial jobless claims fell 11,000 to 445,000 the week ending Oct. 2, the lowest level of initial claims since July.
Continuing claims fell to 4.462 million the week ending Sept. 25 to post a fourth straight decline and dip below the 4.5 million mark for the first time since June.
Economists expected 453,000 initial claims and 4.460 million continuing claims.
Previous Session's Activity
The most actively traded security in the state yesterday was California 5.05s of 2036, which traded 61 times at a high of 101.450 and a low of 97.750.
