NEW YORK – The California municipal market was weaker Monday amid fairly light secondary trading activity, ahead of a heavy slate of new issuance in the primary.
“I’d say we’re somewhere between three and five basis points weaker overall,” a trader in Los Angeles said. “There wasn’t a lot going on in the secondary though. Fairly light trading as we get ready for the onslaught of supply this week. That’s what everybody’s looking at right now. It’s all about the new issues.”
The Municipal Market Data triple-A scale yielded 2.48% in 10 years Monday, up five basis points from Friday’s 2.43%, while the 20-year scale edged up two basis point to 3.34%, up from Friday’s 3.32%. The scale for 30-year debt yielded 3.73%, one basis point higher than Friday’s 3.72%.
Monday’s triple-A muni scale in 10 years was at 96.4% of comparable Treasuries and 30-year munis were at 100.3%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 111.7% of the comparable London Interbank Offered Rate.
The Treasury market was mixed Monday. The benchmark 10-year note was quoted recently at 2.49% after opening at 2.51%.
The 30-year bond was quoted recently at 3.72% after opening at 3.71%. The two-year note was quoted recently at 0.42% after also opening at 0.42%.
The California new-issue market this week is led by a $1.9 billion sale of revenue debt by the California Department of Water Resources, which is scheduled for negotiated pricing by senior manager Bank of America-Merrill Lynch. The bonds will go to retail Wednesday and be priced on Thursday. They are rated Aa3 by Moody's Investors Service, AA-minus by Standard & Poor's, and AA by Fitch Ratings, and are structured to mature serially from 2011 to 2019.
In economic data released Monday, factory orders fell 0.5% in August, after a 0.1% rise in July.
Pending home sales grew 4.3% to a reading of 82.3 in August from a revised 4.5% increase to 78.9 in July, originally reported as a 5.2% gain 79.4, according to an index released Monday by the National Association of Realtors.
Thomson Reuters’ poll of economists had predicted an 81.4 reading.
Previous Session's Activity
The most actively traded security in the state yesterday was taxable California Build America Bonds 7.95s of 2036, which traded 42 times at a high of 110.998 and a low of 107.034.
