NEW YORK – The municipal market showed losses Tuesday for the first time in more than a week, following Treasuries, in light to moderate secondary trading.
“I wouldn’t call it substantially any weaker by any stretch, but there did appear to be a weaker tone today,” a trader in San Francisco said. “We weakened probably two or three basis points in line with Treasuries. There was some decent activity in the secondary, though still on the lighter side.”
The Municipal Market Data triple-A 10-year scale climbed three basis points Tuesday to 3.34%, the 20-year scale increased one basis point to 4.57%, and the scale for 30-year bonds rose one basis point to 4.79%.
In the daily MMD commentary, Randy Smolik wrote “the trend to weaker taxable prices brought a halt to an over one-week old rally in munis.”
“Sell pressure remained controlled,” he wrote. “There was no evidence of forced selling. Although sellers were more flexible on offerings, the adjustments seemed slight secondary offerings tended to be modest to light.”
Tuesday’s triple-A muni scale in 10 years was at 96.8% of comparable Treasuries and 30-year munis were at 103.7% according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 109.6% of the comparable London Interbank Offered Rate.
Treasuries showed some losses Tuesday. The benchmark 10-year note was quoted recently at 3.45% after opening at 3.37%. The 30-year bond was quoted recently at 4.62% after opening at 4.57%. The two-year note was quoted recently at 0.62% after opening at 0.56%.
In the new-issue market Tuesday, Goldman, Sachs & Co. priced for retail investors $775 million of future tax secured bonds for the New York City Transitional Finance Authority. The retail order period began Monday and extends through 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.
Barclays Capital priced $335.8 million of GO bonds for the University of Minnesota Regents.
The bonds mature from 2011 through 2031, with a term bond in 2036. Yields range from 0.75% with a 4% coupon in 2012 to 5.00% priced at par in 2036.
The bonds, which are callable at par in 2020, are rated Aa1 by Moody’s and AA by Standard & Poor’s.
Barclays Capital priced $182.2 million of hospital revenue bonds for Lucas County, Ohio.
The bonds mature from 2015 through 2023, with term bonds in 2037 and a split term maturity in 2041. Yields range from 2.87% with a 3% coupon in 2015 to 6.22% with a 6% coupon in 2041.
The bonds, which are callable at par in 2021, are rated Aa3 by Moody’s and AA-minus by Standard & Poor’s.
Barclays Capital priced $70 million of revenue bonds for the Massachusetts Health and Educational Facilities Authority.
The bonds mature in 2037, yielding 2.70% priced at par.
The bonds, which are not callable, are rated A2 by Moody’s.
Wells Fargo Securities priced $53.5 million of revenue bonds for Pennsylvania’s Allegheny County Higher Education Building Authority.
The bonds mature from 2013 through 2031, with yields ranging from 1.72% with a 3% coupon in 2013 to 5.65% with a 5.5% coupon in 2031.
The bonds, which are callable at par in 2021, are rated A2 by Moody’s and A-minus by Standard & Poor’s.
In economic data released Tuesday, U.S. manufacturing increased in January, reaching its highest level since May 2004, according to the Institute for Supply Management.
The overall economy grew for the twentieth straight time, while the manufacturing sector expanded for the eighteenth time, ISM reported Tuesday.
According to the ISM’s monthly report on business, the ISM index surged to 60.8 in January from 58.5 in December.
Economists polled by Thomson Reuters predicted the index would slip to 58.0.
Construction spending fell 2.5% in December as the dollar amount of construction spending fell to the lowest level more than a decade.
Private construction dropped 2.2%, reversing three consecutive monthly increases. Private residential construction plummeted 4.1%, the largest decline since August.
Economists expected construction spending would be flat in December, according to the median estimate from Thomson Reuters. Construction spending in November was revised to a 0.2% decline from a 0.4% gain previously reported.
Visible Supply
The Bond Buyer's 30-day visible supply rose $509.3 million to $8.976 billion. The total is comprised of $2.130 billion of competitive bonds and $6.846 billion of negotiated bonds.
Previous Session's Activity
The Municipal Securities Rulemaking Board reported there were 47,295 trades of 18,036 issues for a volume of $9.69 billion. Most active was taxable Chicago 7.781s of 2035 that traded 238 times at a high of 104.000 and a low of 100.193.
