NEW YORK — The Massachusetts competitive general obligation issuance was priced aggressively and has seen decent activity.
Bank of America Merrill Lynch won the largest new deal of the day, $500 million of Massachusetts GOs. The bonds are rated Aa1 by Moody’s Investors Service, and AA-plus by Standard & Poor’s and Fitch Ratings.
Yields ranged from 0.69% with a 5.00% coupon in 2015 to 3.53% with a 4.00% coupon in 2028. Credits maturing from 2012 to 2014, 2017, 2022 to 2024, and 2026 were sold but not available.
The deal was priced aggressively, certainly at the short end of the curve. Yields were 10 basis points above Municipal Market Data at the four-year mark, and 13 basis points above MMD at the seven-year mark.
But trading in the secondary market is sluggish Wednesday afternoon, a trader in New York reported. “No one’s hands are forced right now,” he said. “People aren’t up to their liability where they have to sell. And at the same time, if you want to buy something, you can look around and get the best deal. The market’s in flux right now.”
Muni yields continue to firm from the middle of the curve on out Wednesday afternoon, according to the Municipal Market Data scale. The yield curve is steady out to eight years. Beyond that, yields are flat to two basis points lower.
The 10-year muni yield Tuesday ticked down one basis point to 2.12%, up five basis points from the all-time low recorded early last week. The 30-year yield fell two basis points to 3.65%, and the two-year yield stayed at 0.32% for a fourth straight session.
Treasury yields are firming across the curve. The benchmark 10-year Treasury yield has fallen two basis points to 1.90%.
The two-year yield has slipped one basis points to 0.16%. The 30-year yield has dropped two basis points to 3.18%.
The market expects a substantial increase in volume this week, roughly twice the typical weekly average issued this year. The industry anticipated $8 billion will come to market. That’s up from the average $4.6 billion issued weekly thus far in 2011, and last week’s revised $6.2 billion.
In the negotiated market, JPMorgan priced $224 million of West Virginia University improvement revenue bonds in two series. The bonds were rated Aa3 by Moody’s and A-plus by Standard & Poor’s.
Yields for the first series, $173.8 million of university improvement revenue bonds, ranged from 0.50% with a 3.00% coupon in 2012 to 4.35% with a 5.00% coupon in 2036. Credits for the second series, $50 million of university improvement variable rate revenue bonds, were priced to the SIFMA Swap index plus 70 basis points in 2041.
JPMorgan priced for retail $117.8 million of Jefferson Parish Finance Authority, in La., hospital revenue and refunding bonds. The bonds are rated Baa2 by Moody’s and BBB by Standard & Poor’s.
Yields ranged from 2.15% with a 2.00% coupon in 2013 to 5.66% with a 5.625% coupon in 2031. Debt maturing in 2012, 2016, 2020, and 2039 was not offered for retail.
Also, Fitch Ratings released a report Wednesday on the impact of the federal government’s plans for reducing the deficit on state and local governments. While Fitch does not expect any widespread near-term rating changes on state and local government borrowers, the rating agency noted that federal funding is much more significant to state budgets. Local economies would be hit hardest if states then push those cuts down to the local level.
