NEW YORK – The California municipal market was mostly flat Wednesday amid moderate secondary trading activity.
Traders said tax-exempt yields carried a slightly weaker tone through much of the day, but faded in the second half.
“There was pretty decent activity in the afternoon,” a trader in Los Angeles said. “Particularly with high grades. On the whole, I’d say we were flat, maybe with a little weakness out long.”
The Municipal Market Data triple-A scale yielded 2.31% in 10 years Wednesday, up one basis point from Tuesday’s 2.30%, while the 20-year scale climbed one basis point to 3.31% from Tuesday’s 3.30%. The scale for 30-year debt yielded 3.73%, two basis points higher than Tuesday’s 3.71%.
Wednesday’s triple-A muni scale in 10 years was at 95.0% of comparable Treasuries and 30-year munis were at 97.6%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 108.2% of the comparable London Interbank Offered Rate.
The Treasury market showed little movement Wednesday. The benchmark 10-year note was quoted recently at 2.43% after also opening at 2.43%.
The 30-year bond was quoted recently at 3.82% after also opening at 3.82%. The two-year note was quoted recently at 0.37% after also opening at 0.37%.
The Treasury Department Wednesday auctioned $21 billion of 10-year notes with a 2 5/8% coupon at a 2.475% high yield and a price of 101.30. The bid-to-cover ratio was 2.99. Federal Reserve banks bought $184.5 million for their own accounts in exchange for maturing securities.
In the California new-issue market Wednesday, Siebert Brandford Shank & Co. priced $267.0 million of debt for Los Angeles, including $177.4 million of taxable BABs.
The BABs mature in 2039, yielding 5.713% priced at par, or 3.71% after the 35% federal subsidy. The bonds were priced to yield 185 basis points over the 30-year Treasury yield.
The deal also contains $89.6 million of taxable recovery zone economic development bonds, which mature in 2040, yielding 5.813% priced at par. The bonds were priced to yield 195 basis points over the 30-year Treasury yield.
The credit is rated Aa2 by Moody’s, AA by Standard & Poor’s, and AA-plus by Fitch.
In economic data released Wednesday, import prices fell more than economists expected in September, dropping 0.3% due to lower fuel prices.
Economists expected a 0.2% decline in import prices, according to the median estimate from Thomson Reuters.
Export prices rose 0.6% following an 0.8% increase in August. Import prices excluding fuel expanded 0.3% and prices excluding petroleum rose 0.3% to post their largest gain since May.
Previous Session's Activity
The most actively traded security in the state yesterday was Richmond 0s of 2040, which traded 80 times at a high of 104.804 and a low of 100.375.
