NEW YORK - The municipal market was slightly weaker Wednesday, lagging a Treasury sell-off, as moderate activity persisted in the secondary.
"Treasuries are off quite a bit, and we're following suit somewhat, though it's muted," a trader in Los Angeles said. "People are buying at only slight concessions really, and those that need to get deals done are getting them done. Overall, I'd say we're down two or three basis points, depending on the credit quality and maturity."
The Municipal Market Data triple-A scale yielded 2.80% in 10 years Wednesday, one basis point higher than Tuesday's 2.79%, while the 20-year scale yielded 3.97%, up three basis points. The scale for 30-year debt also rose three basis points, to 4.31% from 4.28%.
Wednesday's triple-A muni scale in 10 years was at 94.6% of comparable Treasuries and 30-year munis were at 101.7%, according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 108.8% of the comparable London Interbank Offered Rate.
The Treasury market was weaker across the board Wednesday. The benchmark 10-year note was quoted recently at 2.99% after opening at 2.80%. The 30-year bond was quoted recently at 4.25%, after opening at 4.11%. The two-year note was quoted recently at 0.55% after opening at 0.45%.
In the new-issue market Wednesday, Citi priced $840 million of special-project senior terminal revenue bonds for the Port Authority of New York and New Jersey, to benefit John F. Kennedy International Airport. Pricing information was not available by press time.
The deal was originally slated to come to market Tuesday, but lead manager Citi delayed pricing due to the acceleration of the $1.5 Illinois tobacco pricing. That deal was moved up to Tuesday from Wednesday.
The credit is rated triple-B minus from Moody's Investors Service and Standard & Poor's, and BB from Fitch.
Wells Fargo Securities priced $672.3 million of taxable and tax-exempt debt for Ohio's American Municipal Power Inc.
Bonds from the $609.4 million series of taxable BABs mature from 2020 through 2022 and in 2027, 2035, and 2050. The bonds are priced to yield between 215 and 287.5 basis points over corresponding Treasury yields.
Bonds from the $38.4 million series of traditional taxable bonds mature from 2016 through 2020, and are priced to yield between 200 and 240 basis points over corresponding Treasury yields.
Bonds from the $20 million series of taxable clean-renewable energy bonds mature in 2029 and are priced to yield 235 basis points over the 30-year Treasury yield.
Also, bonds from the $4.5 million tax-exempt series mature in 2020 and are priced to yield 4.00% with a 5% coupon.
The credit is rated A3 by Moody's and A by Standard & Poor's and Fitch.
Morgan Stanley priced $367 million of state personal income tax revenue bonds for the Empire State Development Corp.
The bonds mature in 2011 and from 2015 through 2020, with yields ranging from 1.62% with a 2% coupon in 2015 to 3.17% with a 4% coupon in 2020. Bonds maturing in 2011 were decided via sealed bid.
The bonds, which are not callable, are rated AAA by Standard & Poor's and AA by Fitch.
Barclays Capital priced $165 million of taxable debt for Washington Biomedical Research Facilities 3, including $151.7 million of taxable Build America Bonds.
The BABs mature from 2014 through 2022, with term bonds in 2025, 2030, and 2042. Yields range from 3.049% in 2014, or 1.98% after the 35% federal subsidy, to 6.516% in 2042, or 4.24% after the subsidy, all priced at par. The bonds were priced to yield between 145 and 310 basis points over the corresponding Treasury yields, and contain a make-whole call at Treasuries plus 45 basis points.
The deal also contains a $13.2 million series of traditional taxable bonds, which mature in 2013, yielding 2.242% priced at par. The bonds were priced to yield 145 basis points over the comparable Treasury yield.
The credit is rated Aa1 by Moody's and AA-plus by Standard & Poor's.
The Delaware Transporation Authority competitively sold $119.8 million of tax-exempt and taxable bonds to Bank of America Merrill Lynch in three series, including $72.1 million of taxable BABs. All bonds in all series were sold but not available.
The BABs mature from 2019 through 2025, with a term maturity in 2030. Coupons range from 3.95% in 2019, or 2.57% after the 35% federal subsidy, to 5.80% in 2030, or 3.77% after the subsidy. The bonds are callable at par in 2020.
Bonds from the $16.3 million tax-exempt series mature in 2011, 2016, 2017, and 2019, with a 2.5% coupon in 2011 and 5% coupons on the remaining the maturities. These bonds are not callable.
Bonds from the $31.4 million tax-exempt series mature from 2011 through 2018, with coupons ranging from 3% in 2011 to 5% in 2018. These bonds are not callable.
The credit is rated Aa2 by Moody's and AA-plus by Standard & Poor's.
Also, Bank of America Merrill Lynch priced for retail investors $187.8 million of tax-exempt general obligation bonds for Honolulu.
The bonds mature from 2015 through 2035, with yields ranging from 1.61% with a 5% coupon in 2015 to 4.53% with a 4.5% coupon in 2035.
The bonds, which are callable at par in 2020, are rated Aa1 by Moody's and AA-plus by Fitch.
In economic data released Wednesday, the U.S. manufacturing sector expanded for the 16th consecutive month in November, according to the Institute for Supply Management's report on business.
The ISM index dipped less than economists predicted, falling to 56.6 in November from 56.9 in October. Economists polled by Thomson Reuters predicted a reading of 56.2.
Construction spending unexpectedly surged 0.7% in October, aided by a strong gain in residential construction.
Economists expected a 0.4% decline in construction spending. September construction spending was revised upward to a 0.7% increase from the 0.5% rise initially reported last month.
The productivity of U.S. workers rose at an annual rate of 2.3% in the third quarter as output and hours worked increased.
The productivity gain was revised upward from the 1.09% increase initially reported for the third quarter. Productivity has been volatile this year, falling 1.8% in the second quarter after expanding 3.9% in the first quarter.
Unit labor costs, a ratio of hourly compensation to productivity, were unchanged from initial estimates at a 0.1% dip. They rose 4.9% in the second quarter. Economists expected a 2.3% gain in productivity and a 0.4% drop in unit labor costs.
Visible Supply
The Bond Buyer's 30-day visible supply fell $371.7 million to $16.877 billion. The total is comprised of $2.760 billion in competitive bonds and $14.117 billion in negotiated bonds.
Previous Session's Activity
The Municipal Securities Rulemaking Board reported 50,560 trades of 17,929 issues for total volume traded of $14.53 billion on Tuesday. The most actively traded bond was taxable California BABs 7.7s of 2030, which traded 359 times at a high of 105.031 and a low of 101.106.
