NEW YORK - The California municipal market was slightly weaker Wednesday following two sessions of substantial losses.
"I wouldn't exactly say we're better, because we're not, but it feels a little better," a trader in Los Angeles said. "Then again, being off a basis point or two certainly feels better than being down 10. It's still pretty messy out there though, and I suspect that won't change until the new year."
In the new-issue market Wednesday, the San Francisco Public Utilities Commission competitively sold $523.5 million of debt, including $350 million of taxable BABs.
The BABs mature in 2050, yielding 6.875% with a 6.95% coupon, or 4.47% after the 35% federal subsidy. The bonds were priced to yield 235 basis points over the 30-year Treasury yield and contain a make-whole call at Treasuries plus 25 basis points.
The $173.5 million series of tax-exempt revenue bonds was also sold in the competitive market, though no further information was available by press time. They are set to mature from 2017 through 2030.
The credit is rated Aa2 by Moody's and AA-minus by Standard & Poor's.
The Municipal Market Data triple-A 10-year scale widened three basis points Tuesday to reach an 18-month high of 3.27%, the highest since June 24, 2009; the 20-year scale increased one basis point to a 21-month high of 4.52%, the highest since March 31, 2009; and the scale for 30-year debt rose one basis points to a 21-month high of 4.85%, the highest since March 27, 2009.
Wednesday's triple-A muni scale in 10 years was at 93.4% of comparable Treasuries and 30-year munis were at 105.7%, according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 112.8% of the comparable London Interbank Offered Rate.
The Treasury market was mostly weaker Wednesday. The benchmark 10-year note was quoted recently at 3.52% after opening at 3.48%. The 30-year bond was quoted recently at 4.59%, after opening at 4.53%. The two-year note was quoted recently at 0.66% after also opening at 0.66%.
In economic data released Wednesday, consumer prices edged higher by 0.1% in November. Core consumer prices, excluding food and energy costs, also increased 0.1%, the first increase since July. October's consumer prices rose 0.2%, while the core was flat in the month.
Economists expected consumer prices would rise 0.2% and core prices would rise 0.1%, according to the median estimate from Thomson Reuters.
Industrial production increased 0.4% in November, the largest increase since July. Capacity utilization increased to 75.2%, the highest level since October 2008, from 74.9% in October.
Industrial production in October declined 0.2%, revised lower from a flat reading reported last month. October capacity utilization was revised higher from 74.7%.
Economists expected industrial production to increase 0.3% and for capacity utilization to be 75.0%.
Previous Session's Activity
The most actively traded security in the state yesterday was California 5s of 2025, which traded 76 times at a high of 100.500 and a low of 97.500.
