NEW YORK – Even though the primary market is light as the end of the week approaches, buyers are still eating up new bonds.
“Negotiated new deals are going really well even with the Treasury down,” said a trader in New York. “Don’t believe the equity rally.”
This trader said new deals are being priced well despite the secondary market showing weakening. “Some dealers are cutting bonds to move them,” he said. “There are almost no counters to any bid we show. It’s very sloppy.”
Munis were mixed, according to the Municipal Market Data scale, with the market firming on the short-end and weakening on the long-end. Yields on the two- and three-year fell up to four and three basis points, respectively. The five-year yield fell four basis points. The belly of the curve was steady through 20 years. Yields on credits maturing beyond 21-years rose two basis points.
On Wednesday, the two-year muni closed at 0.42% for its 20th consecutive trading session. The 10-year finished flat at 2.22% and the 30-year yield finished up five basis points to 3.84%.
Treasuries were mixed in Thursday early afternoon trading. The two-year yield fell one basis point to 0.26%. The benchmark 10-year yield fell four basis points to 2.09%. And the 30-year yield fell four basis points to 3.10%.
In the primary market, issuers in California stole the show.
Bank of America Merrill Lynch priced $148.2 million of California Health Facilities Financing Authority revenue refunding bonds for Cedars-Sinai Medical Center. The credit is rated A2 by Moody’s Investors Service and A-plus by Fitch Ratings.
Yields ranged from 1.10% with a 3% coupon in 2013 to 3.47% with a 5% coupon in 2021. Bonds maturing in 2012 were offered via sealed bid.
Bank of America Merrill Lynch priced $127.2 million of California Department of Veterans Affairs home purchase revenue bonds. The credit is rated Aa3 by Moody’s, AA by Standard & Poor’s, and AA-minus by Fitch.
Yields on the first series, $123.2 million of bonds not subject to the alternative minimum tax, ranged from 0.75% priced at par in 2013 to 4.542% with a 4.5% coupon in 2028. The debt is callable at par in 2021.
Bonds in the second series, $4 million subject to the alternative minimum tax, yielded 1.25% priced at par in 2013.
Barclays Capital repriced $55 million of California Municipal Finance Authority revenue bonds on behalf of Emerson College. The credit is rated Baa1 by Moody’s and BBB-plus by Standard & Poor’s.
The bonds yielded 5.11% with a 5% coupon in 2028, 5.38% with a 5.75% coupon in 2033, and 5.54% with a 6% coupon in 2042. The bonds are callable at par in 2022. Yields were lowered two, seven, and six basis points, respectively, from preliminary pricing.
In the competitive market, Bank of America Merrill Lynch won the bid for $119.1 million of Kansas Development Finance Authority revenue bonds. The credit is rated Aa3 by Moody’s and AA by Standard & Poor’s.
Yields ranged from 0.61% and 0.68% with 4% coupons in a 2013 split maturity to 3.00% at par in 2021. Debt maturing in 2012, 2020, 2022, and 2023 was sold but not available. The bonds are callable at par in 2019.
