The municipal market was unchanged to firmer by about one or two basis points yesterday, as some of the week’s larger deals were priced in the primary.
“It’s a little bit firmer out there, but it really depends on what you’re trading,” a trader in Los Angeles said. “I’m seeing strength more so on the long end than anywhere else. If we’re better it’s maybe a basis point or two. But you could still call it fairly unchanged and not really be wrong.”
In the new-issue market yesterday, the Hall County and Gainesville, Ga., Hospital Authority priced $566 million of revenue bonds in a negotiated deal led by Bank of America Merrill Lynch. Pricing information on the sale was not available by press time.
Bonds from the $316.5 million Series A mature from 2016 through 2021, and in 2025, 2030, 2034, 2040, and 2045. Bonds from the $250 million series mature from 2016 through 2022, and in 2025, 2030, 2035, and 2040.
The bulk of the issue, which will benefit Northeast Georgia Health System Inc., is rated A by Fitch Ratings. Fitch rates the $250 million Series 2010B bonds A-plus because they are additionally secured by Hall County should revenue be insufficient to meet debt service.
Citi priced $530 million of taxable Build America Bonds for the San Diego Water Authority. The BABs mature in 2049 and were priced to yield 160 basis points over the comparable Treasury yield. More detailed pricing information was not available by press time.
The credit is rated Aa3 by Moody’s Investors Service, AA by Standard & Poor’s, and AA-plus by Fitch.
The Treasury market showed some gains yesterday. The yield on the benchmark 10-year note opened at 3.70% and finished at 3.66%.
The yield on the two-year note opened at 0.89% and finished at 0.89%. The yield on the 30-year bond finished at 4.54% after opening at 4.59%.
Yesterday’s Municipal Market Data triple-A scale yielded 3.03% in 10 years and 3.74% in 20 years, compared to levels of 3.04% and 3.76% on Tuesday.
The scale yielded 4.05% in 30 years yesterday, following Tuesday’s level of 4.08%.
As of Tuesday’s close, the triple-A muni scale in 10 years was at 81.9% of comparable Treasuries and 30-year munis were 88.7% of comparable Treasuries, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 91.5% of the comparable London Interbank Offered Rate.
Elsewhere in the new-issue market, the New Jersey Educational Facilities Authority competitively sold $250 million of revenue bonds to JPMorgan on behalf of Princeton University, with a true interest cost of 4.03%.
The bonds mature from 2012 through 2035, with a term bond in 2040. None of the bonds were formally re-offered.
The bonds, which are callable at par in 2019, are rated triple-A by Moody’s and Standard & Poor’s.
Bank of America Merrill Lynch priced $320.4 million of hospital revenue bonds for the Louisiana Local Government Environmental Facilities and Community Development Authority.
Bonds from the $233.6 million Series A mature from 2017 through 2020, with term bonds in 2025, 2030, 2040, and 2044. Yields range from 4.74% with a 5% coupon in 2017 to 6.15% with a 6% coupon in 2044. The bonds are callable at par in 2020.
Bonds from the $86.8 million Series B mature from 2017 through 2020, with term bonds in 2025, 2030, 2040, and 2044. Yields range from 4.79% with a 4.5% coupon in 2017 to 6.15% with a 6% coupon in 2044. The bonds are callable at par in 2015, except bonds maturing in 2044, which are callable at par in 2020.
The credit is rated A3 by Moody’s and BBB-plus by Standard & Poor’s.
First Southwest Co. priced $146.7 million of certificates of obligation for Lubbock, Tex., in two series, including $96.5 million of taxable BABs.
The Series B BABs mature from 2018 through 2024, with a term bond in 2030. Yields range from 4.44% in 2018, or 2.89% after the 35% federal subsidy, to 6.03% in 2030, or 3.92% after the subsidy, all priced at par. The bonds were priced to yield between 80 and 170 basis points over the comparable Treasury yields.
The $50.2 million Series A matures from 2011 through 2030, with yields ranging from 0.89% with a 1.875% coupon in 2012 to 4.46% with a 4.3% coupon in 2030. Bonds maturing in 2011 were decided via sealed bid.
All the bonds are callable at par in 2019, and are rated Aa3 by Moody’s, AA-plus by Standard & Poor’s, and AA by Fitch.
In economic data released yesterday, the producer price index increased 0.2% in December after a 1.8% increase the previous month.
Core producer prices, those excluding food and energy costs, were flat for the month, after a 0.5% jump the previous month.
Economists expected producer prices to be flat in December and for core prices to increase 0.1%, according to the median estimate from Thomson Reuters.
Groundbreaking for new home construction in December fell to a rate of 557,000, while private housing permits rose to a rate of 653,000.
The December rate for private housing starts was lower than the 580,000 predicted by economists polled by Thomson Reuters. It followed an upwardly revised 580,000 rate in November.
Meanwhile, the December level of building permits came after a revised 589,000 November figure. However, the December rate easily beat economists’ 580,000 estimate.