Market Close: Munis Unch to Slightly Firmer At Close

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NEW YORK – The municipal market was unchanged to slightly firmer today. Traders said tax-exempt yields were lower by as much as one or two basis points in spots, but largely flat. “It seems to be exceptionally quiet,” a trader in Los Angeles said. “We did a few trades in the morning, but towards the afternoon, it just got really quiet. It seems like the market was actually firmer all day, but we just don’t have any follow-through in terms of sales. But I still think there’s a decent feeling out there. It has a decent tone to it, and my guess is it’ll probably be very quiet again tomorrow, but on the firm side.” Trades reported by the Municipal Securities Rulemaking Board today showed some gains. A dealer bought from a customer Texas’ Tarrant County Cultural Education Facilities Finance Corp. 5s of 2036 at 5.16%, down one basis point from where they were sold yesterday. A dealer sold to a customer insured Texas State University 5s of 2029 at 4.62%, even with where they traded yesterday. Bonds from an interdealer trade of Indiana Finance Authority 5s of 2035 yielded 5.18%, two basis points lower than where they traded yesterday. Bonds from an interdealer trade of Minnesota Housing Finance Agency 5s of 2036 yielded 5.03%, even with where they were sold yesterday. Bonds from an interdealer trade of California’s Palm Desert Financing Authority 5.125s of 2036 yielded 5.235, down one basis point from where they traded yesterday. The Treasury market, however, showed losses today. The yield on the benchmark 10-year Treasury note, which opened at 3.73%, was recently quoted at 3.77%. The yield on the two-year note was recently at 2.35%, after opening at 2.26%. In the new issue market today, Citi priced $525 million of health facility revenue bonds for Catholic Healthcare West in 11 series. The deal was split between two issues, with the California Statewide Communities Development Authority issuing series A, B, C, D, and E, accounting for $226.3 million, and the California Health Facilities Finance Authority issuing series G, H, I, J, K, and L, accounting for $298.7 million. Bonds from the $48 million series A mature in 2030, yielding 5.50%, priced at par. Bonds from the $32 million series B mature in 2030, yielding 5.50%, priced at par. Bonds from the $40 million series C mature in 2035, yielding 5.60%, priced at par. Bonds from the $63.7 million series D mature in 2031, yielding 5.54% with a 5.625% coupon. Bonds from the $42.6 million series E mature in 2031, yielding 5.54% with a 5.625% coupon. Bonds from the $29.7 million series G mature in 2025, yielding 5.24% with a 5.5% coupon in 2025. Bonds from the $54.7 million series H mature in 2022, yielding 5.125%, priced at par. Bonds from the $53.7 million series I mature in 2022, yielding 5.125%, priced at par. Bonds from the $67.7 million series J mature in 2032, yielding 5.55% with a 5.625% coupon. Bonds from the $54.1 million series K mature in 2022, yielding 5.02% with a 5.5% coupon. And bonds from the $38.9 million series L mature in 2022, yielding 5.02% with a 5.5% coupon. Bonds from series H, I, J, K, and L are callable at par in 2015. Bonds from series B, D, and E are callable at par in 2017. And bonds from series A, C, and G are callable at par in 2018. The credit is rated A2 by Moody’s Investors Service, A by Standard & Poor’s, and A-plus by Fitch Ratings. Goldman, Sachs & Co. priced $560.2 million of water revenue certificates of participation for the San Diego County Water Authority. The bonds mature from 2012 through 2028, with term bonds in 2033 and 2038. Yields range from 2.98% with a 4% coupon in 2012 to 4.81% with a 5% coupon in 2038. The bonds, which are callable at par in 2018, are insured by Financial Security Assurance Inc. The underlying credit is rated Aa3 by Moody’s, AA-plus by Standard & Poor’s, and AA by Fitch. Goldman Sachs also priced $286.5 million of revenue bonds for the Dormitory of the State of New York, to benefit Memorial Sloan-Kettering Cancer Center. The bonds mature from 2013 through 2019, with term bonds in 2024, 2025, and 2026. Yields range from 3.29% with a 4% coupon in 2013 to 4.58% with a 5% coupon in 2026. The bonds, which are callable at par in 2018, are rated Aa2 by Moody’s and AA by both Standard & Poor’s and Fitch. South Carolina’s Piedmont Municipal Power Agency came to market with $141 million of tax-exempt and taxable electric revenue bonds, priced by Goldman Sachs in three series. Bonds from the $37.9 million tax-exempt series A-2 mature in 2024 and 2025, yielding 5.06% and 4.64%, respectively, each with 5% coupons. Bonds maturing in 2025 are insured by Assured Guaranty Corp. Bonds from the $87.7 million series A-3, which matures from 2016 through 2019, has yields ranging from 4.37% with a 5% coupon in 2016 to 4.71% with a 5.25% coupon in 2019. Bonds maturing in 2017 and 2018 are insured by Assured Guaranty. The other bonds are uninsured. All bonds from series A-2 and A-3 are callable at par in 2018. The underlying credit is rated Baa1 by Moody’s Investors Service, BBB by Standard & Poor’s, and BBB-plus by Fitch Ratings. The deal also contains a $15.3 taxable series A-1, which matures from 2010 through 2014. Bonds from this series are insured by Assured Guaranty. In economic data released today, personal income rose 0.3% in March, after a 0.5% increase the previous month. Economists polled by IFR Markets had predicted a 0.3% jump. Personal consumption increased 0.4% in March, after a 0.1% uptick the previous month. Economists polled by IFR Markets had predicted a 0.3% gain. The core personal consumption expenditures deflator rose 0.2 in March, after a 0.1% increase the previous month. Economists polled by IFR Markets had predicted a 0.2% rise. Initial jobless claims for the week ended April 26 came in at 380,000, after a revised 345,000 the previous week. Economists polled by IFR Markets had predicted 360,000 initial jobless claims. Continuing jobless claims for the week ended April 19 came in at 3.019 million, after a revised 2.945 million the prior week. Economists polled by IFR Markets had predicted 2.950 million continuing jobless claims. The Institute for Supply Management’s business activity composite index remained at 48.6 in April, unchanged from 48.6 in March. Economists polled by IFR Markets predicted the index would slip to 48.0. Spending on construction projects fell 1.1% to a seasonally adjusted annual rate of $1.124 trillion in March as private construction decreased 1.7%, and public construction grew 0.6%. The overall decrease, which was larger than the 0.9% decrease projected by IFR Markets, followed a revised February increase of 0.4% to a level of $1.137 trillion. More economic data will be released tomorrow, led by the April non-farm payrolls report. In addition to payrolls, March factory orders will be released. Economists polled by IFR Markets are predicting a loss of 75,000 jobs, a 0.3% jump in factory orders, and a 2.0% increase in factory orders excluding transportation. Visible SupplyThe Bond Buyer’s 30-day visible supply fell $1.091 billion to $11.492 billion. The total is comprised of $1.980 billion of competitive deals and $9.512 billion of negotiated bonds. Previous Session’s ActivityThe Municipal Securities Rulemaking Board reported 44,828 trades yesterday of 13,883 separate issues for volume of $23.78 billion. Most active was insured Illinois Finance Authority 5s of 2041, which traded 898 times at a high of par and a low of 95.626.   

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