NEW YORK – The municipal market was mostly flat Thursday as the New Jersey Transportation Trust Fund Authority came to market with $1.5 billion of debt, including $1 billion of taxable Build America Bonds.
“I think sluggish is a good word for the secondary right now,” a trader in New York said. “There aren’t a whole lot of folks really inspired to get anything done. The bid-side is decent, but we’re just flat on the whole. I’m not really seeing any change in the scale whatsoever.”
In the new-issue market Wednesday, Barclays Capital priced $1.5 billion of debt for the New Jersey TTFA, including $1 billion of taxable BABs.
The BABs contain a split maturity in 2028, yielding 5.754% and 6.104%, or 3.74% and 3.97% after the 35% federal subsidy, both priced at par. The bonds were priced to yield 195 and 230 basis points over the 30-year Treasury yield and contain a make-whole redemption at Treasuries plus 100 basis points.
The deal includes $485.9 million of tax-exempt transportation system bonds.
The bonds mature from 2016 through 2019 and from 2022 through 2024, with yields ranging from 2.25% with a 3% coupon in 2016 to 3.97% with a 5% coupon in 2024. The bonds are not callable.
The sale also contains a $14.1 million series of taxable debt, which matures in 2017, yielding 3.60% at par. The bonds were priced to yield about 160 basis points higher than the seven-year Treasury.
The credit is rated Aa3 by Moody’s Investors Service and AA-minus by both Standard & Poor’s and Fitch Ratings.
The Municipal Market Data triple-A scale yielded 2.32% in 10 years Thursday, up one basis point from Wednesday’s 2.31%, while the 20-year scale climbed one basis point to 3.32% from Wednesday’s 3.31%. The scale for 30-year debt yielded 3.73%, matching Wednesday.
“It’s pretty much unchanged,” a trader in Los Angeles said. “There was some decent trading activity, but overall, just an unchanged day.”
Thursday’s triple-A muni scale in 10 years was at 93.2% of comparable Treasuries and 30-year munis were at 95.6%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 105.7% of the comparable London Interbank Offered Rate.
The Treasury market showed losses Thursday. The benchmark 10-year note was quoted recently at 2.51% after opening at 2.43%.
The 30-year bond was quoted recently at 3.91% after opening at 3.82%. The two-year note was quoted recently at 0.39% after opening at 0.36%.
The Treasury Department Thursday auctioned $13 billion of 30-year bonds with a 3 7/8% coupon at a 3.852% high yield and a price of 100.40. The bid-to-cover ratio was 2.49. Federal Reserve banks also bought $114.2 million for their own accounts in exchange for maturing securities.
Elsewhere in the new-issue market Thursday, JPMorgan priced $247.5 million of second lien revenue bonds for Chicago in four series.
Bonds from the $84.1 million tax-exempt series mature in 2034, yielding 2.43% with a 5% coupon. These bonds are not callable.
Bonds from the $63.5 million taxable series mature from 2016 through 2025, with term bonds in 2030, 2035, and 2041. The bonds were priced to yield between 195 and 350 basis points over the seven-, 10-, and 30-year Treasury yields.
The deal also contains an $82.4 million taxable series and a $17.5 million taxable series, both of which mature in 2041 and are not callable.
The credit is rated A3 by Moody’s and A-minus by both Standard & Poor’s and Fitch.
JPMorgan priced $206.0 million of mortgage revenue bonds for New York’s Monroe County Industrial Development Agency.
The bonds mature from 2015 through 2023, with term bonds in 2025, 2030, 2035, and 2040. Yields range from 2.26% with a 5% coupon in 2015 to 4.72% with a 5.5% coupon in 2040.
The bonds are callable at par in 2021, except bonds maturing in 2023, which are callable at par in 2015, and bonds maturing in 2025, which are callable at par in 2014.
The credit is rated Aa2 by Moody’s and AA-minus by Standard & Poor’s.
In economic data released Thursday, producer prices rose more than economists expected in September, jumping 0.4% due to higher food prices.
Core prices, excluding food and energy goods, edged up 0.1% for the month. Economists expected increases of 0.2% in producer prices and 0.1% in core prices, according to the median estimate from Thomson Reuters.
Initial jobless claims rose by 13,000 filings to a four-week high of 462,000 the week ending Oct. 9.
Continuing claims fell to 4.399 million, the lowest level in almost two years.
Economists expected 445,000 initial claims and 4.450 million continuing claims, according to the median estimate from Thomson Reuters.
Visible Supply
The Bond Buyer’s 30-day visible supply rose $340.2 million to $12.133 billion. The total is comprised of $2.763 billion of competitive bonds and $9.370 billion of negotiated bonds.
Previous Session's Activity
The Municipal Securities Rulemaking Board reported 41,796 trades of 16,562 issues for volume of $11.80 billion. Most active was taxable New York 5.817s of 2031 that traded 491 times at a high of 104.250 and a low of 98.627.
