NEW YORK - The municipal market was slightly weaker today, with tax-exempt yields higher on the short end of the curve, but largely flat on the long end.
“I would say we’re down maybe a basis point or two overall,” a trader in New York said. “But it’s not trading a whole lot.”
Trades reported by the Municipal Securities Rulemaking Board today have shown some losses. A dealer sold to a customer insured New York State Thruway Authority 5s of 2015 at 3.81%, up two basis points from where they sold yesterday. Bonds from an interdealer trade of Maple Grove, Minn., 5.25s of 2037 yielded 5.08%, up two basis points from where they sold yesterday. Bonds from an interdealer trade of Puerto Rico 5.25s of 2030 yielded 4.74%, even with where they sold yesterday.
The Treasury market showed little movement today. The yield on the benchmark 10-year Treasury note, which opened at 4.66%, finished at 4.65%. The yield on the two-year note was quoted near the end of the session at 4.14%, after opening at 4.13%.
In economic data released today, wholesale inventories rose 0.1% in August, after a 0.2% rise the previous month. Also, wholesale sales climbed 0.4% in August, after a revised 0.2% gain the prior month. Economists polled by IFR Markets predicted a 0.3% increase in wholesale inventories and a 0.2% uptick in wholesale sales.
Later this week, a slate of potential market-moving data will be released. Tomorrow, September import prices, initial jobless claims for the week ended Oct. 6, and continuing jobless claims for the week ended Oct. 29 will be released. Then, Friday, the September producer price index and PPI core will be released, in addition to September retail sales, August business inventories and business sales, and the preliminary October University of Michigan consumer sentiment index.
Economists polled by IFR Markets are predicting an 0.8% rise in import prices, 315,000 initial claims, 2.550 million continuing claims, 0.5% growth in PPI, a 0.2% jump in the PPI core, a 0.3% gain in retail sales, a 0.3% increase in sales excluding autos, a 0.2% uptick in business inventories, a 0.5% dip in business sales, and an 83.8 reading in the Michigan sentiment index.
In the new-issue market today, Lehman Brothers priced $416 million of limited project revenue bonds for the University of California. The bonds mature from 2012 through 2032, with term bonds in 2037 and 2041. Yields range from 3.52% with a 4% coupon in 2012 to 4.57% with a 5% coupon in 2041. The bonds are callable at a premium in 2016. Financial Guaranty Insurance Co. insures the bonds, except those maturing in 2012 and 2013, which are uninsured. The underlying credit is rated Aa2 by Moody’s Investors Service and AA-minus by Standard & Poor’s.
The university last sold limited project revenue bonds in October 2005. Lehman Brothers priced that $616 million deal in two series. Bonds from the $600.5 million Series B mature from 2009 through 2030, with term bonds in 2033 and 2038. Yields range from 3.20% with a 3.25% coupon in 2009 to 4.65% with a 5% coupon in 2038. Bonds maturing from 2012 through 2038 are insured by Financial Security Assurance Inc. All remaining bonds are uninsured.
Among 5% coupon paper in the deal, bonds maturing in 2029 were tightest to that day’s Municipal Market Data triple-A yield curve, with yields 26 basis points over the curve. Bonds maturing in 2016 were widest to the scale, with yields 40 basis points over.
Citi priced $338.2 million of revenue bonds for the New York State Power Authority in two series. Bonds in the tax-exempt series - worth $82 million - mature in 2047 with two different coupon rates. Yields range from 4.75% with a 4.5% coupon to 4.63% with a 5% coupon. The bonds are callable at par in 2017. MBIA Insurance Corp. insures the bonds and the underlying credit is rated Aa2 by Moody's, AA-minus by Standard & Poor’s, and AA by Fitch. The deal also contained a $256.2 million taxable component.
The Power Authority last sold revenue bonds in January 2006. Morgan Stanley priced that $173 million deal, which had bonds maturing from 2007 through 2020. Yields range from 3.23% with a 3.2% coupon in 2007 to 4.06% with a 5% coupon in 2020. Bonds maturing from 2010 through 2020 are insured by Financial Guaranty Insurance Co. All remaining bonds are uninsured.
Among insured 5% coupon paper in the deal, bonds maturing from 2018 through 2020 were tightest to that day’s MMD triple-A yield curve, with yields seven basis points over the curve. Bonds maturing in 2013 and 2014 were widest to the scale, with yields 11 basis points over.
Banc of America Securities LLC priced $250 million of special tax obligation bonds for Connecticut. The bonds mature in 2008 through 2027. Yields range from 3.33% with a 4% coupon in 2009 to 4.33% with a 5% coupon in 2027. The bonds are callable at par in 2017. Ambac Assurance Corp. insures the bonds, except those maturing in 2008, which remain uninsured. The underlying credit is rated A1 by Moody’s, AA by Standard & Poor’s, and AA-minus by Fitch.
UBS Securities LLC priced $83 million of special obligation bonds for the Mississippi Development Bank in two series. Bonds in the larger series - worth $52 million and slated for Marshall County - mature in 2009 through 2025, with term bonds in 2027, 2031, and 2035. Bonds in the smaller series - worth $31 million and slated for DeSoto County - mature in the same years. Yields for both issues range from 3.47% with a 4.25% coupon in 2009 to 4.82% with a 4.75% coupon in 2035. All bonds are callable at par in 2018. Ambac Assurance Corp. insures the bonds and the underlying credit is rated A1 by Moody’s and AA-minus by Standard & Poor’s.
The triple-A rated Minnesota Public Facilities Authority competitively sold $80 million of clean water revenue bonds to Merrill Lynch, at a true interest cost of 4.42%. The bonds mature from 2009 through 2028. Yields range from 3.45% with a 4% coupon to 4.60% with a 4.5% coupon in 2028. Bonds maturing in 2022 through 2027 were not formally re-offered. The bonds are callable at par in 2017.
Knoxville, Tenn., competitively sold $75 million of wastewater system revenue bonds to Wachovia Bank, at a true interest cost of 4.69%. The bonds mature from 2018 through 2033, with term bonds in 2037, 2040, 2041, and 2042. Yields range from 4.63% with a 4.5% coupon in 2037 to 4.77% with a 4.75% coupon in 2042. Bonds maturing from 2018 through 2033, and 2041 were not formally re-offered. The bonds are callable at par in 2017.Financial Security Assurance insures the bonds and the underlying credit is rated Aa3 by Moody’s and AA by Standard & Poor’s.
Orlando, Fla., competitively sold $57.4 million of capital improvement special revenue bonds to JPMorgan, with a true interest cost of 4.71%. The bonds mature in 2008 through 2027, with term bonds in 2032 and 2037. Yields range from 3.49% with a 4% coupon in 2009 to 4.53% with a 5% coupon in 2037. Bonds maturing in 2008 were priced via sealed bid. The bonds are callable at par in 2017. MBIA Insurance Corp. insures the bonds and the underlying credit is rated Aa3 by Moody’s, AA-minus by Standard & Poor’s, and AA by Fitch.
Also, UBS Securities LLC tentatively priced $55.2 million of water system revenue bonds for the West Harris County Regional Water Authority, Texas. The bonds mature from 2011 through 2027, with term bonds in 2031. Yields range from 3.58% with a 4% coupon in 2011 to 4.58% with a 5% coupon in 2031. The bonds are callable at par in 2017. MBIA Insurance Corp. insures the bonds and the underlying credit is rated A3 by Moody’s and A by Standard & Poor’s.
Visible Supply
The Bond Buyer’s 30-day visible supply rose $2.735 billion to $20.496 billion. The total is comprised of $2.902 billion of competitive deals and $17.594 billion of negotiated bonds.
Previous Session’s Activity
The Municipal Securities Rulemaking Board reported 42,730 trades Tuesday of 16,140 separate issues for volume of $19.982 billion. Most active was California stem-cell research 5.17s of 2037, which traded 113 times at a high of 100.5 and a low of 99.83.
