NEW YORK – The municipal market was somewhat weaker Tuesday in light to moderate secondary trading activity.
“There’s something of a heavier tone,” a trader in San Francisco said. “We’re probably weaker by two or three basis points. The secondary is a bit sloppy, but business is getting done. Treasuries are off a little bit and we’re following suit for the most part.”
The Municipal Market Data triple-A 10-year scale increased two basis points Tuesday to 3.24%, the 20-year scale rose three basis points to 4.58%, and the scale for 30-year climbed four basis points to 4.83%.
“We’re starting off with a bit of weakness,” a trader in New York said. “We’re down maybe a basis point or two overall. There’s some decent activity though. There are some bits and pieces trading.”
Tuesday’s triple-A muni scale in 10 years was at 97.0% of comparable Treasuries and 30-year munis were at 107.8%, according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 115.6% of the comparable London Interbank Offered Rate.
Treasuries showed some losses Tuesday. The benchmark 10-year note was quoted recently at 3.34% after opening at 3.28%. The 30-year bond was quoted recently at 4.49% after opening at 4.46%. The two-year note was quoted recently at 0.60% after opening at 0.57%.
The Treasury Department auctioned $32 billion of three-year notes with a 1% coupon at a 1.027% yield, a price of 99.92. The bid-to-cover ratio was 3.06. The Federal Reserve banks also bought $701.3 million for their own account in exchange for maturing securities.
The Treasury Department also auctioned $25 billion of four-week bills at a 0.145% high yield, a price of 99.99. The coupon equivalent was 0.147%. The bid-to-cover ratio was 4.91. The Fed banks bought $5,937,991,000 for their own account in exchange for maturing securities.
A snowstorm expected to hit the east coast late Tuesday into Wednesday could disrupt a number of deals planned for pricing in Wednesday’s primary market.
Already, pricing on the New Jersey Economic Development Authority’s $1.9 billion school construction bond issue, planned for Wednesday, has been postponed to Thursday in anticipation of the storm.
“The New York area forecast is for heavy snow, calling into question whether normal communications between banks and investors will be possible on Wednesday,” said Andrew Pratt, spokesman for New Jersey’s Treasury department. “The snow delay is designed to ensure that all potential buyers of New Jersey debt will have a chance to participate in the sale.”
Despite the postponement of the institutional order period, retail pricing was completed Tuesday as planned.
Bonds from the $1.2 billion series of tax-exempt refunding debt mature from 2014 through 2024, with yields ranging from 2.30% with a 3% coupon in 2014 to 4.98% with a 5% coupon in 2024. These bonds are callable at par in 2021.
The $400 million series of SIFMA index refunding notes matures in 2016 and 2017, yielding 155 and 163 basis points over the SIFMA index. They are callable at par in 2015 and 2016, respectively.
The deal also contains $245 million of taxable refunding bonds. Retail pricing information on this series was not available.
The credit is rated Aa3 by Moody’s Investors Service and AA-minus by both Standard & Poor’s and Fitch Ratings.
The New York City Transitional Finance Authority continued its retail order period on $875 million of future tax-secured subordinate bonds. The deal is set to be priced by Barclays Capital on Wednesday, following a two-day retail order period that began Monday. The bonds are structured to mature serially from 2012 to 2031 and include two term bonds
In Tuesday’s retail order period, yields range from 1.17% with a 2.5% coupon in 2013 to 5.10% with a 5% coupon in 2034. Bonds maturing in 2012 will be decided via sealed bid. Bonds maturing in 2024, 2025, from 2027 through 2030, and in 2039 were not offered during the retail order period. The bonds are callable at par in 2020.
The credit is rated Aa1 by Moody's and AAA by both Standard & Poor's and Fitch.
Elsewhere in the new-issue market Tuesday, Morgan Stanley priced $124.5 million of certificates of participation for Upland, Calif.
The debt matures from 2012 through 2021, with term maturities in 2026, 2031, and 2041. Yields range from 1.77% with a 3% coupon in 2012 to 6.50% with a 6.25% coupon in 2041.
The bonds, which are callable at par in 2021, are rated A3 by Moody’s and A by Standard & Poor’s.
In economic data released Tuesday, wholesale inventories unexpectedly declined 0.2% in November, the first drop in inventories in 11 months.
Wholesale sales increased 1.9% for the month. Sales increased 2.6% in October, revised up from 2.2%.
Economists expected inventories would rise 1.0% and sales would increase 1.5%, according to the median estimate from Thomson Reuters.
Visible Supply
The Bond Buyer's 30-day visible supply rose $90.8 million to $10.193 billion. The total is comprised of $2.324 million of competitive bonds and $7.869 billion of negotiated bonds.
Previous Session's Activity
The Municipal Securities Rulemaking Board reported 44,163 trades of 16,985 issues for volume of $9.45 billion. Most active was Florida State Board of Education 5s of 2036 that traded 151 times at a high of 101.177 and a low of 97.875.
