NEW YORK – The California municipal market was somewhat weaker Tuesday in light to moderate secondary trading activity.
“There’s something of a heavier tone,” a trader in San Francisco said. “We’re probably weaker by two or three basis points. The secondary is a bit sloppy, but business is getting done. Treasuries are off a little bit and we’re following suit for the most part.”
The Municipal Market Data triple-A 10-year scale increased two basis points Tuesday to 3.24%, the 20-year scale rose three basis points to 4.58%, and the scale for 30-year climbed four basis points to 4.83%.
Tuesday’s triple-A muni scale in 10 years was at 97.0% of comparable Treasuries and 30-year munis were at 107.8%, according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 115.6% of the comparable London Interbank Offered Rate.
Treasuries showed some losses Tuesday. The benchmark 10-year note was quoted recently at 3.34% after opening at 3.28%. The 30-year bond was quoted recently at 4.49% after opening at 4.46%. The two-year note was quoted recently at 0.60% after opening at 0.57%.
The Treasury Department auctioned $32 billion of three-year notes with a 1% coupon at a 1.027% yield, a price of 99.92. The bid-to-cover ratio was 3.06. The Federal Reserve banks also bought $701.3 million for their own account in exchange for maturing securities.
The Treasury Department also auctioned $25 billion of four-week bills at a 0.145% high yield, a price of 99.99. The coupon equivalent was 0.147%. The bid-to-cover ratio was 4.91. The Fed banks bought $5,937,991,000 for their own account in exchange for maturing securities.
In the new-issue market Tuesday, Morgan Stanley priced $124.5 million of certificates of participation for Upland, Calif.
The debt matures from 2012 through 2021, with term maturities in 2026, 2031, and 2041. Yields range from 1.77% with a 3% coupon in 2012 to 6.50% with a 6.25% coupon in 2041.
The bonds, which are callable at par in 2021, are rated A3 by Moody’s and A by Standard & Poor’s.
In economic data released Tuesday, wholesale inventories unexpectedly declined 0.2% in November, the first drop in inventories in 11 months.
Wholesale sales increased 1.9% for the month. Sales increased 2.6% in October, revised up from 2.2%.
Economists expected inventories would rise 1.0% and sales would increase 1.5%, according to the median estimate from Thomson Reuters.
Previous Session's Activity
The most actively traded security in the state yesterday was taxable California BABs 7.7s of 2030, which traded 53 times at a high of 105.543 and a low of 101.963.
