NEW YORK – The streak is over.
After nine straight sessions, 10-year municipals did not set a new record low Monday, instead remaining flat amid fairly light secondary trading to open the week.
“There was still a definite firmer tone, but like Friday, the secondary was quiet,” a trader in Los Angeles said. “There wasn’t a whole lot trading, but business that needed to get done got done. Overall though, it was pretty quiet and pretty flat.”
The Municipal Market Data triple-A scale yielded 2.29% in 10 years and 3.39% in 20 years Monday, matching record-low levels of 2.29% and 3.39% Thursday. The scale yielded 3.75% in 30 years Friday, matching an all-time low of 3.75% Thursday.
Monday’s unchanged levels break streaks of nine straight historical low for 10-year munis, and two second consecutive all-time lows for 20- and 30-year tax-exempts.
Monday’s triple-A muni scale in 10 years was at 88.4% of comparable Treasuries and 30-year munis were at 102.7%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 114.0% of the comparable London Interbank Offered Rate.
The Treasury market was mostly flat Monday. The benchmark 10-year note was quoted recently at 2.60% after opening at 2.61%. The 30-year bond was quoted recently at 3.66% after also opening at 3.66%. The two-year note was quoted recently at 0.49% after also opening at 0.49%.
While the seasonal note calendar is in full swing, the dog days of summer are plaguing issuance in the long-term bond market.
Amid the largest budget shortfall in Texas history, a $7.8 billion issuance of tax and revenue anticipation notes from the state will dominate the short-term market, while longer-term supply is expected to be fairly skimpy this week.
Volume in the primary market is estimated at $4.77 billion, according to Ipreo LLC and The Bond Buyer. That follows a revised $5.65 billion that was priced last week, according to Thomson Reuters.
On behalf of the state, the Texas Public Finance Authority will thunder into the competitive market Tuesday. Bids will be received by the state comptroller through a website operated by Grant Street Group at
The Trans, which have the highest short-term ratings from all three major rating agencies, are being issued to avoid a temporary cash shortfall in the unrestricted accounts in the state's general revenue fund during fiscal 2011, which begins Sept. 1, according to the preliminary official statement.
Texas officials currently project that the maximum temporary cash shortfall in fiscal 2011 will be $10.8 billion before application of the note proceeds and other available interfund and intrafund borrowing.
The state expects to begin fiscal 2011 with a $2.2 billion negative cash balance in the general fund's unrestricted accounts. It's expected to end fiscal 2011 with a negative cash balance of $4.5 billion after payment of the Series 2010 notes.
Rated MIG-1 by Moody's Investors Service, SP1-plus by Standard & Poor's, and F1-plus by Fitch Ratings, the notes are secured by a lien on all amounts held in the proceeds account, the payment account, and the sinking account of the note fund.
In the long-term market, a $533 million revenue sale from the Southern California Public Power Authority also will be priced by JPMorgan on Wednesday following a retail order period Tuesday. The bonds are being issued on behalf of the Windy Point/Windy Flats power project.
They mature from 2011 to 2030 and have AA-minus ratings from Standard & Poor's and Fitch.
In the new-issue market Monday, Wells Fargo Securities priced $243.2 million of solid waste disposal revenue and refunding bonds for the North Carolina Capital Facilities Finance Agency in three series.
Bonds from the $71.6 million revenue Series 2006A mature in 2031, yielding 4.375% priced at par. The bonds are callable at par in 2020.
Bonds from the $71.6 million revenue Series 2006B mature in 2031, yielding 4.375% priced at par. The bonds are callable at par in 2020.
Bonds from the $50.0 million revenue refunding Series 2008A mature in 2040, yielding 4.625% priced at par. The bonds are callable at par in 2020.
Bonds from the $50.0 million revenue refunding Series 2008B mature in 2040, yielding 4.625% priced at par. The bonds are callable at par in 2020.
The credit is rated A1 by Moody’s and A by Standard & Poor’s.
Morgan Stanley priced $64.0 million of revenue bonds for the Louisiana Local Government Environmental Facilities and Community Development Authority.
The bonds mature from 2020 through 2025, with yields ranging from 3.14% with a 3.375% coupon in 2020 to 3.98% with a 3.75% coupon in 2025.
The bonds, which are callable at par in 2020, are rated A1 by Moody’s and A-plus by Standard & Poor’s.
Also, First Southwest Co. priced $52.0 million of unlimited tax school building bonds for Texas’ Donna Independent School District.
The bonds mature from 2011 through 2030, with term bonds in 2035 and 2040. Yields range from 0.48% with a 2% coupon in 2012 to 4.18% with a 4% coupon in 2040.
The bonds, which are callable at par in 2020, are backed by the Permanent School Fund guarantee program. The underlying credit is rated A2 by Moody’s and A by Standard & Poor’s.
The economic calendar was light Monday.
Visible Supply
The Bond Buyer’s 30-day visible supply rose $325.9 million to $7.471 billion. The total is comprised of $1.630 billion of competitive bonds and $5.841 billion of negotiated bonds.
Previous Session's Activity
The Municipal Securities Rulemaking Board reported 34,667 trades of 12,851 issues for volume of $15.40 billion. Most active was Missouri Western State University 6.25s of 2035 that traded 276 times at par.
