The municipal market was mixed yesterday amid light to moderate secondary trading activity.
“It’s pretty mixed,” a trader in New York said. “We’re kind of all over the place right now. I’m seeing losses here and there, seeing it flat in some places, maybe even some gains in spots, depending on what you’re trading. There is a decent amount of activity out there right now, but I think I’d just call it mixed. It’s kind of hard to get a read on this market.”
“We’re pretty much cheapening up on the short end, but picking up a couple basis points out long,” a trader in Los Angeles said. “So it’s just a pretty mixed day altogether. We’re not talking a ton of movement either. It’s maybe a basis point or two weaker on the short end, and maybe about the same margin firmer on the long end.”
The Treasury market mostly showed gains yesterday. The benchmark 10-year note was quoted near the end of the session with a yield of 3.83% after opening at 3.85%.
The yield on the two-year was quoted near the end of the session at 1.03% after opening at 1.06%. The yield on the 30-year bond was quoted near the end of the session at 4.72% after opening at 4.74%.
The Municipal Market Data triple-A scale yielded 3.09% in 10 years and 3.84% in 20 years yesterday, compared to Tuesday’s levels of 3.08% and 3.86%. The scale yielded 4.17% in 30 years yesterday, matching Tuesday’s level.
Yesterday’s triple-A muni scale in 10 years was at 79.6% of comparable Treasuries and 30-year munis were at 87.6%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 93.3% of the comparable London Interbank Offered Rate.
In the new-issue market yesterday, North Carolina competitively sold $487.7 million of general obligation public improvement bonds to Citi.
The bonds mature from 2011 through 2030, with yields ranging from 1.10% with a 5% coupon in 2013 to 3.83% with a 5% coupon in 2030.
Bonds maturing in 2011 and 2012 were not formally re-offered.
The bonds, which are callable at par in 2020, are rated triple-A by all three major rating agencies.
Bank of America Merrill Lynch priced $168.5 million of hospital refunding revenue bonds for Tennessee’s Johnson City Health and Educational Facilities Board.
The bonds mature from 2011 through 2020, with term bonds in 2025, 2030, and 2038.
Yields range from 2.00% with a 3% coupon in 2011 to 5.87% with a 6.5% coupon in 2038.
The bonds, which are callable at par in 2020, are rated Baa1 by Moody’s Investors Service and BBB-plus by Standard & Poor’s.
Morgan Stanley priced $161.4 million of airport facilities revenue bonds for Florida’s Greater Orlando Aviation Authority, in two series.
Bonds from the $77.2 million Series A mature from 2014 through 2025, with term bonds in 2032 and 2040. Yields range from 2.18% with a 4% coupon in 2014 to 5.05% with a 5% coupon in 2040. The bonds are callable at par in 2020.
Bonds from the $84.2 million Series B, which is subject to the alternative minimum tax, mature from 2011 through 2018, with yields ranging from 2.25% with a 5% coupon in 2012 to 4.39% with a 4.25% coupon in 2018.
Bonds maturing in 2011 were not formally re-offered. The bonds are not callable.
The credit is rated Aa3 by Moody’s, A-plus by Standard & Poor’s, and AA-minus by Fitch Ratings.
M.R. Beal & Co. priced $84.7 million of general revenue tax-exempt and taxable bonds for the University of California Regents in two series.
Bonds form the $75.6 million tax-exempt series mature from 2016 through 2030, with term bonds in 2035 and 2040. Yields range from 2.63% with a 3% in 2016 to 4.67% with a 5% coupon in 2040. The bonds are callable at par in 2018.
The deal also contains a $9.1 million taxable component, which matures in 2020, 2025, and 2033.
The bonds were priced to yield 115, 170, and 140 basis points over the comparable Treasury yield, respectively. The bonds contain a make-whole call at Treasuries plus 25 basis points.
The credit is rated Aa1 by Moody’s and AA by Standard & Poor’s.
Bank of America Merrill Lynch also priced $36 million of hospital refunding revenue bonds for Virginia’s Smyth County Industrial Development Authority.
The bonds mature from 2011 through 2020, with term bonds in 2023 and 2028. Yields range from 1.90% with a 2.5% coupon in 2011 to 5.56% with a 5.5% coupon in 2028.
The bonds, which are callable at par in 2020, are rated Baa1 by Moody’s and BBB-plus by Standard & Poor’s.
In economic data released yesterday, new factory orders for manufactured goods increased 0.6% in February, while orders in January were revised higher to the largest monthly increase in almost three years.
Orders excluding transportation increased 0.7%, the largest increase in two months and the seventh consecutive gain.
January factory orders increased 2.5%, revised up from 1.7% initially reported, the largest increase since March 2007. Orders excluding transportation in January were revised to a 0.5% gain from 0.1%.
Economists expected factory orders to increase 0.5% in February, according to the median estimate from Thomson Reuters.
The Chicago Purchasing Managers’ Business Barometer fell to 58.8 in March from 62.6 in February.
Economists polled by Thomson Reuters predicted a 61.0 reading for the indicator.
