NEW YORK – The California municipal market was slightly firmer today amid moderate secondary trading activity.
“There’s been a bit of an about-face, at least for today,” a trader in Los Angeles said. “You had that ADP report that was helping drive Treasury yields down, and that’s helped us out a bit. Plus with a couple of those refunding postponements you saw in Georgia and Pennsylvania, you’ve seen some more buying today.”
The Municipal Market Data triple-A scale yielded 2.43% in 10 years Wednesday, down six basis points from Tuesday’s 2.49%, while the 20-year scale dropped two basis points to 3.35%, down from Tuesday’s 3.36%. The scale for 30-year debt yielded 3.73%, one basis point lower than Tuesday’s 3.74%.
The Treasury market was posted gains Wednesday. The benchmark 10-year note was quoted recently at 2.40% after opening at 2.47%.
The 30-year bond was quoted recently at 3.67% after opening at 3.75%. The two-year note was quoted recently at 0.39% after opening at 0.40%.
In economic data released Wednesday, private-sector employment decreased 39,000 on a seasonally adjusted basis in September, compared to August, according to the latest ADP National Employment Report released Wednesday.
Wednesday’s triple-A muni scale in 10 years was at 102.1% of comparable Treasuries and 30-year munis were at 102.2%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 113.0% of the comparable London Interbank Offered Rate.
In the California new-issue market Wednesday, Bank of America Merrill Lynch priced for retail investors $1.8 billion of power supply revenue bonds for the California Department of Water Resources. The bonds will be priced for institutional investors Thursday.
The bonds mature from 2011 through 2019, with yields ranging from 0.88% with a 2% coupon in 2012 to 2.75% with a 5% coupon in 2019. The bonds are not callable.
The bonds are rated Aa3 by Moody’s, AA-minus by Standard & Poor’s, and AA by Fitch.
Morgan Stanley priced $292.6 million of revenue bonds for the California Statewide Communities Development Authority.
The bonds mature from 2011 through 2020, with term bonds in 2030 and 2040. Yields range from 1.58% with a 3% coupon in 2012 to 5.00% priced at par in 2040. Bonds maturing in 2011 were not formally re-offered.
The bonds, which are callable at par in 2020, are rated A-plus by Standard & Poor’s and AA-minus by Fitch.
Bank of America Merrill Lynch priced $150 million of taxable wastewater system revenue Build America Bonds for California’s East Bay Municipal Utility District.
The bonds mature in 2032, 2033, and 2040, yielding 5.026%, 5.076%, and 5.176%, all priced at par, or 3.27%, 3.30%, and 3.36% after the 35% federal subsidy.
The bonds were priced to yield 135, 140, and 150 basis points over the 30-year Treasury yield, and contain a make-whole call at Treasuries plus 22.5 basis points.
The credit is rated Aa2 by Moody’s, AAA by Standard & Poor’s, and AA-plus by Fitch.
Previous Session's Activity
The most actively traded security in the state yesterday was Mount Diablo Unified School District 0s of 2022, which traded 33 times at a high of 58.665 and a low of 57.040.
