The municipal market was mostly unchanged Thursday amid light to moderate secondary trading activity, as some of the week’s largest scheduled transactions were priced in the primary.
“I have not seen much change,” a trader in Los Angeles said. “It’s been quiet out there. Not a whole lot of activity.”
Prices were mostly unchanged from Wednesday, he said, with a few instances in which they were cheaper, but nothing indicative of a change in scale.
A New York trader described the session as “very quiet.”
“There’s nothing you can put a finger on,” the trader said. “Tuesday was very busy, yesterday was OK, and today is very lackluster. It is kind of quiet across the board.”
The Treasury market mostly showed losses Thursday. The benchmark 10-year note finished at 3.03% after opening at 2.93%. The 30-year bond finished at 4.01% after opening at 3.89%. The two-year note was quoted near the end of the session at 0.63% after opening at 0.61%.
The Municipal Market Data triple-A scale yielded 2.67% in 10 years and 3.70% in 20 years Thursday, matching Wednesday. The scale yielded 3.99% in 30 years Thursday, also matching Wednesday.
Wednesday’s triple-A muni scale in 10 years was at 89.6% of comparable Treasuries and 30-year munis were at 100.8%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 106.1% of the comparable London Interbank Offered Rate.
In Thursday’s new-issue market, Jefferies & Co. priced $400.9 million of revenue bonds for the Virgin Islands Public Finance Authority in two series.
Bonds from the $305 million Series A mature from 2012 through 2017, with term bonds in 2020, 2025, and 2029. Yields range from 2.12% with a 4% coupon in 2012 to 5.10% with a 5% coupon in 2029. The bonds are callable at par in 2020.
Bonds from the $95.9 million Series B mature in 2020, 2025, and 2029, yielding 4.47% with a 4.25% coupon, 5.12% with a 5% coupon, and 5.30% with a 5.25% coupon. The bonds are callable at par in 2020.
Moody’s Investors Service rates both series Baa2. Standard & Poor’s rates the senior bonds BBB and the subordinate bonds BBB-minus. Fitch Ratings rates the senior bonds BBB-plus and the subordinate debt BBB.
Citi priced $308.2 million of revenue bonds for the Delaware River Port Authority. The issuer originally considered bringing the deal to market as taxable Build America Bonds, but instead opted for tax-exempt debt.
The bonds mature from 2027 through 2030, with term bonds in 2035 and 2040. Yields range from 4.74% with a 5% coupon in 2027 to 5.15% with a 5% coupon in 2040. They’re callable at par in 2020.
A portion of bonds maturing in 2040 are insured by Assured Guaranty Corp. The remaining bonds are uninsured. The underlying credit is rated A3 by Moody’s and A-minus by Standard & Poor’s.
Miami-Dade County competitively sold $250 million of tax anticipation notes to Piper Jaffray & Co., with a true interest cost of 0.31%. The Tans mature in Jan. 2011, yielding 1.5% priced at par. The credit is rated MIG-1 by Moody’s.
Montgomery County, Md., competitively sold $195 million of consolidated public improvement bonds to Bank of America Merrill Lynch with a TIC of 2.26%. The bonds mature from 2011 through 2022, with yields ranging from 1.82% with a 5% coupon in 2016 to 3.00% priced at par in 2022. Bonds maturing from 2011 through 2015 and in 2021 were not formally re-offered.
The bonds, which are callable at par in 2020, are rated triple-A by all three major ratings agencies.
Montgomery County also competitively sold $130 million of taxable BABs to Prager Sealy & Co. with a TIC of 5.07%.
The BABs mature from 2023 through 2030. Yields range from 5.10% in 2027, or 3.32% after the 35% federal subsidy, to 5.40% in 2030, or 3.51% after the subsidy, all priced at par. The bonds are callable at par in 2020.
Morgan Stanley priced $163.3 million of special obligation bonds for the Mississippi Development Bank in two series.
Bonds from the $93.7 million Series C mature from 2016 through 2023, with a term bond in 2027. Yields range from 2.71% with a 5% coupon in 2016 to 4.49% with a 5.25% coupon in 2027. The bonds are callable at par in 2020.
Bonds from the $69.6 million Series D mature from 2016 through 2027, with yields ranging from 2.71% with a 5% coupon in 2016 to 4.49% with a 5.25% coupon in 2027. The bonds are callable at par in 2020.
The credit is rated AA-minus by Standard & Poor’s and AA by Fitch.
In economic data released yesterday, initial claims for unemployment benefits decreased to 454,000 for the week ending July 3, the lowest level in more than a month. Continuing claims fell by 224,000 to a 20-month low of 4.413 million, the lowest level since November 2008 and the largest weekly drop in a month.
Economists expected 465,000 initial claims and 4.6 million continuing claims, according to the median estimate from Thomson Reuters.
Slow growth is likely to create political pressure in the second half of 2010, according to John Silvia, chief economist at Wells Fargo Securities.
“Job growth has been limited,” Silvia said in a research note. “Credit growth has been restrained and the recovery in housing far less significant than promised by policymakers.”
Priti Patnaik contributed to this column.