The municipal market was mostly unchanged with a firmer tone yesterday in the wake of the deluge of new issuance that soaked the primary Wednesday.
“There’s not a whole lot of movement,” a trader in New York said. “There’s a decent amount of activity, and it’s maybe a touch firmer in spots, but on the whole, I’d call it pretty flat right now.”
“We’ve got a bit of a firmer tone, but I can’t really call it firmer by any substantial amount,” a trader in Los Angeles said. “You can pick up a basis point here and there, but we’re unchanged for the most part.”
The Treasury market showed gains yesterday. The yield on the benchmark 10-year note opened at 3.80% and finished at 3.73%. The yield on the two-year note opened at 0.96% and finished at 0.92%. The yield on the 30-year bond finished at 4.61%,after opening at 4.71%.
Yesterday’s Municipal Market Data triple-A scale yielded 3.04% in 10 years and 3.76% in 20 years, matching Wednesday’s levels. The scale yielded 4.09% in 30 years yesterday, following Wednesday’s level of 4.10%.
As of Wednesday’s close, the triple-A muni scale in 10 years was at 81.3% of comparable Treasuries and 30-year munis were 88.0% of comparable Treasuries, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 90.3% of the comparable London Interbank Offered Rate.
In the new-issue market yesterday, Barclays Capital priced $150 million of general revenue mandatory tender bonds for New York’s Triborough Bridge and Tunnel Authority.
The bonds mature in 2038, yielding 1.33% with a 4% coupon.
The credit is rated Aa2 by Moody’s Investors Service, AA-minus by Standard & Poor’s, and AA with a negative outlook by Fitch Ratings.
Bank of America Merrill Lynch priced $94.1 million of unlimited-tax refunding bonds for the Port of Houston Authority of Harris County in three series.
Bonds from the $38.1 million Series A, which is subject to the alternative minimum tax, mature from 2010 through 2019, with yields ranging from 1.48% with a 3% coupon in 2011 to 4.15% with a 5% coupon in 2019. Bonds maturing in 2010 were decided via sealed bid. The bonds are not callable.
Bonds from the $22.9 million Series B, which is not subject to the AMT, mature from 2010 through 2026, with yields ranging from 0.68% with a 2.5% coupon in 2011 to 3.96% with a 5% coupon in 2026. Bonds maturing in 2010 were decided via sealed bid. The bonds are callable at par in 2019.
Bonds from the $33.0 million Series C, which is not subject to the AMT, mature from 2011 through 2029, with term bonds in 2031 and 2038.
Yields range from 0.68% with a 2% coupon in 2011 to 4.46% with a 5% coupon in 2038.
The bonds are callable at par in 2019. The series also contains $2.9 million of capital appreciation bonds maturing in 2032 and 2033, with yields to maturity of 5.30% and 5.37%, respectively. The CABs are not callable.
The credit is rated AAA by Standard & Poor’s and AA-plus by Fitch.
Kentucky’s Lexington-Fayette Urban County Government competitively sold $69.3 million of taxable Build America Bonds to Piper Jaffray & Co. with a true interest cost of 3.18%.
The bonds mature from 2011 through 2030, with yields ranging from 2.75% priced at par in 2014, or 1.79% after the 35% federal subsidy, to 5.60% priced at par in 2030, or 3.64% after the subsidy.
Bonds maturing from 2011 through 2013, from 2020 through 2022, and in 2026 were not formally re-offered.
The bonds, which are callable at par in 2020, are rated Aa2 by Moody’s and AA-plus by Standard & Poor’s.
In economic data released yesterday, initial jobless claims increased by 11,000 to 444,000 for the week ending Jan. 9 as continuing claims dropped by the largest amount in five weeks.
Continuing unemployment claims dropped by 211,000 to 4.596 million for the week ending Jan. 2, to the lowest level since Jan. 10, 2009.
Initial claims for the week ending Jan. 2 were revised slightly lower to 433,000. Continuing claims for the week ending Dec. 26 was revised higher to 4.807 million.
Economists polled by Thomson Reuters expected 437,000 initial claims and 4.800 million continuing claims.
Retail sales fell 0.3% in December after a 1.3% gain the previous month.
Meanwhile, excluding autos for the month of December, sales fell 0.2%, following the category’s unrevised 1.2% rise in November.
Economists polled by Thomson Reuters had expected overall retail sales to increase 0.5% in December and for sales excluding autos to increase 0.3%, according to the median estimate.
Import prices were flat in December, after a 1.6% rise the previous month. Economists expected December import prices to be unchanged, according to the median estimate from Thomson.
Business inventories climbed 0.4% in November. Economists polled by Thomson Reuters expected business inventories to increase 0.3%.