NEW YORK – The California municipal market was slightly firmer Tuesday amid light to moderate secondary trading activity.
“We’re up about three basis points on the whole,” a trader in Los Angeles said. “Most of the attention was focused on the primary, but there was some decent trading activity, and we’re a little bit better.”
The Municipal Market Data triple-A scale yielded 2.79% in 10 years Tuesday, three basis points lower than Monday’s 2.82%, while the 20-year scale yielded 3.94%, down three basis points from Monday. The scale for 30-year debt also declined three basis points, to 4.28% from Monday’s 4.31%.
Tuesday’s triple-A muni scale in 10 years was at 99.6% of comparable Treasuries and 30-year munis were at 103.9%, according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 111.7% of the comparable London Interbank Offered Rate.
The Treasury market showed mild gains Tuesday. The benchmark 10-year note was quoted recently at 2.81% after opening at 2.82%. The 30-year bond was quoted recently at 4.13%, after opening at 4.14%. The two-year note was quoted recently at 0.47% after opening at 0.51%.
In the new-issue market Tuesday, JPMorgan priced $492.7 million of taxable Build America Bonds for the Los Angeles Department of Water and Power.
The BABs mature in 2041 and 2050, yielding 7.003% and 6.603%, respectively, or 4.55% and 4.29% after the 35% federal subsidy.
The bonds were priced to yield 290 and 250 basis points over the 30-year Treasury yield, respectively, and contain a make-whole call at Treasuries plus 40 basis points.
The credit is rated Aa2 by Moody’s Investors Service, AA by Standard & Poor’s, and AA-plus by Fitch.
In economic data released Tuesday, the Chicago Purchasing Managers’ Business Barometer rose to 62.5 in November from 60.6 in October.
The data is compiled on a seasonally adjusted basis. An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.
Economists polled by Thomson Reuters predicted a 60.0 reading for the indicator.
The consumer confidence index climbed to 54.1 in November from a downwardly revised 49.9 last month. The October index was originally reported as 50.2.
Economists polled by Thomson Reuters predicted the index would be 52.0.
Previous Session's Activity
The most actively traded security in the state yesterday was taxable California BABs 7.7s of 2030, which traded 359 times at a high of 104.750 and a low of 100.594.
