NEW YORK – The municipal market was mostly unchanged Monday amid light to moderate secondary trading activity.
“We’re pretty flat,” a trader in New York said. “It’s a bit of a quiet start to the week. There isn’t a whole lot of movement just yet.”
The Municipal Market Data triple-A 10-year scale was flat Monday at 3.31%, the 20-year scale remained unchanged at 4.56%, and the scale for 30-year bonds held at 4.78%.
Monday’s triple-A muni scale in 10 years was at 97.9% of comparable Treasuries and 30-year munis were at 104.4 according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 112.5% of the comparable London Interbank Offered Rate.
Treasuries showed some losses Monday. The benchmark 10-year note was quoted recently at 3.39% after opening at 3.32%. The 30-year bond was quoted recently at 4.58% after opening at 4.53%. The two-year note was quoted recently at 0.57% after opening at 0.54%.
With a $1.1 billion Chicago airport deal postponed, the New York City Transitional Finance Authority and North Carolina instead will offer two of the largest deals in a lackluster week as February starts with an estimated $3.02 billion of volume, according to Ipreo LLC and The Bond Buyer.
In the new-issue market Monday, Goldman, Sachs & Co. priced for retail investors $775 million of future tax secured bonds for the New York City Transitional Finance Authority. Another day of retail marketing will follow Tuesday before institutional pricing Wednesday.
The bonds mature from 2013 through 2031, with a term bond in 2035. Yields range from 0.82% with a 2.5% coupon in 2013 to 5.15% with a 5.125% coupon in 2035. Bonds maturing in 2022, 2024, 2025, and from 2027 through 2030 were not offered to retail investors.
The bonds, which are callable at par in 2021, are rated Aa1 by Moody’s Investors Service and AAA by both Standard & Poor’s and Fitch Ratings.
North Carolina will lead competitive market this week with $500 million of Series 2011 capital-improvement limited obligation bonds.
Rated Aa1 by Moody's and AA-plus by Fitch, the bonds are structured to mature from 2012 to 2031.
One of the only other sizable deals expected to price this week in the negotiated market is a $338 million general obligation sale from the University of Minnesota Regents. Barclays Capital is expected to price the bonds on Tuesday with ratings of Aa1 from Moody's and AA by Standard & Poor's.
This week's primary market will be relatively sparse now that Chicago has decided to pull its $1.1 billion offering for O'Hare International Airport.
The city is fighting a lawsuit filed by the airport's two largest carriers challenging its authority to finish work on an $8 billion expansion.
The deal was originally slated to price Wednesday after a retail order period Tuesday, but is now pending until there is a resolution of the litigation, market participants said.
Citi is the book-running senior manager and Siebert Brandford Shank & Co. is co-senior. The deal includes a mix of securities, some backed solely by passenger facility charges and others by both PFCs and federal grants.
The muni market showed no tangible reaction a Wall Street Journal article over the weekend that indicates states are increasing their focus on marketing tax-exempt debt to retail investors.
“No one’s really talking about it,” a trader in Los Angeles said. “But it’s definitely something we’ve been seeing out here for quite some time, and it seems like it’s picking up some steam elsewhere in the country.”
In economic data released Monday, personal income gained 0.4% and consumption increased 0.7% in December as energy costs increased, but core consumption increased annually by the smallest amount on record.
Core PCE, which excludes food and energy costs and is the Federal Reserve’s preferred measure of inflation, increased 0.7% from December 2009, a record low increase dating back to 1959. The figure edged down from the previous record low increase of 0.8% set in November. On a monthly basis, core PCE was flat in December.
Energy goods and service prices jumped 4.7% for the month in December.
November’s personal income figure was revised higher to a 0.4% increase from the 0.3% gain reported last month.
Economists expected personal consumption would increase 0.5% and income would increase 0.4%, according to the median estimate from Thomson Reuters
The Chicago Purchasing Managers’ Business Barometer rose to 68.8 in January from 66.8 in December. The data is compiled on a seasonally adjusted basis. An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.
Economists polled by Thomson Reuters predicted a 65.0 reading for the indicator.
Visible Supply
The Bond Buyer's 30-day visible supply fell $443.0 million to $8.467 billion. The total is comprised of $1.895 billion of competitive bonds and $6.572 billion of negotiated bonds.
Previous Session's Activity
The Municipal Securities Rulemaking Board reported there were 42,416 trades of 16,398 issues for a volume of $11.70 billion. Most active was taxable Chicago 7.781s of 2035 that traded 166 times at a high of 104.000 and a low of 99.806.
