The municipal market was unchanged to slightly firmer yesterday, as New York came to market with three competitive offerings worth a total of $448.5 million.
“There’s some decent activity out there,” a trader in New York said. “It feels a little bit firmer, maybe a basis point or so in spots. Overall, we’re still fairly unchanged, but there is a firmer tone.”
“We’re seeing some mild gains,” a trader in Los Angeles said. “It’s mostly on the shorter to intermediate part on the curve. We’re probably one, maybe two basis points better on the whole, but out long, we’re not really seeing much movement at all. I’d call it pretty flat out long.”
In the new-issue market yesterday, New York competitively sold $217 million of taxable Build America Bonds to Morgan Stanley with a true interest cost of 5.27%, or 3.43% after the 35% federal subsidy.
The bonds mature from 2018 through 2030, with a term bond in 2035. Yields range from 4.09% in 2018, or 2.66% after the subsidy, to 5.62%, or 3.65% after the subsidy, all priced at par. The bonds were priced to yield between 45 and 125 basis points over the comparable Treasury yield. The bonds are subject to a make-whole redemption at Treasuries plus 25 basis points.
The state also competitively sold $180.5 million of tax-exempt general obligation bonds to Citi, with a TIC of 3.24%.
The bonds mature from 2011 through 2030, with term bonds in 2032, 2035, and 2040. Yields range from 1.00% with a 2% coupon in 2013 to 4.58% with a 4.5% coupon in 2040. Bonds maturing in 2011, 2012, and 2018 were not formally re-offered. The series also contains capital appreciation bonds maturing in 2020, which were not formally re-offered. All of the bonds are callable at par in 2010.
Additionally, New York competitively sold $51.0 million of taxable GO bonds to TD Securities with a TIC of 3.44%.
The bonds mature from 2011 through 2020, with coupons ranging from 1% in 2011 to 4.25% in 2020. None of the bonds were formally re-offered. The are not callable.
The credit is rated Aa3 by Moody’s Investors Service, AA by Standard & Poor’s, and AA-minus by Fitch Ratings.
Meanwhile, the Treasury market was slight firmer yesterday. The benchmark 10-year note was quoted near the end of the session with a yield of 3.64% after opening at 3.69%. The yield on the two-year was quoted near the end of the session at 0.83% after opening at 0.86%. The yield on the 30-year bond was quoted near the end of the session at 4.58% after opening at 4.63%.
The Municipal Market Data triple-A scale yielded 2.84% in 10 years and 3.81% in 20 years yesterday, following levels of 2.85% and 3.82% on Wednesday. The scale yielded 4.17% in 30 years yesterday, versus 4.17% on Wednesday.
Wednesday’s triple-A muni scale in 10 years was at 77.2% of comparable Treasuries and 30-year munis were at 90.1%, according to MMD, while 30-year tax-exempt triple-A GOs were at 93.7% of the comparable London Interbank Offered Rate.
Elsewhere in the new-issue market yesterday, RBC Capital Markets priced $120.9 million of bonds for the Florida Atlantic University Finance Corp. in two series, including $112.5 million of taxable BABs.
The BABs mature from 2017 through 2021, with term bonds in 2025, 2030, 2037, and 2040. Yields range from 5.48% in 2017, or 3.65% after the 35% federal subsidy, to 7.64% in 2040, or 4.97% after the subsidy, all priced at par. The bonds were priced to yield between 220 and 340 basis points over the comparable Treasury yields. The bonds are callable at par in 2020.
The deal also contained an $8.5 million tax-exempt series, which mature from 2013 through 2016. Yields range from 2.18% with a 4% coupon in 2013 to 3.44% with a 5% coupon in 2016. These bonds are not callable.
The credit is rated A2 by Moody’s and A by Standard & Poor’s and A by Fitch.
Citi priced $115 million of taxable BABs for the Florida State Board of Education.
The bonds mature from 2018 through 2025, with term bonds in 2029. Yields range from 4.94% in 2018, or 3.21% after the 35% federal subsidy, to 6.58% in 2029, or 4.28% after the subsidy, all priced at par. The bonds were priced to yield between 125 and 235 basis points over the comparable Treasury yields.
The bonds, which are callable at par in 2019, are rated A2 by Moody’s, AAA by Standard & Poor’s, and A by Fitch.
Citi also priced $95 million of health care revenue bonds for Virginia’s Fairfax County Industrial Development Authority. The bonds mature in 2039, yielding 0.23% priced at par. The bonds are not callable, and are rated VMIG-1 by Moody’s and A-1-plus by Standard & Poor’s.
In economic data released yesterday, initial jobless claims increased to 496,000 for the week ending Feb. 20. Continuing claims increased to 4.617 million for the week ending Feb. 13.
Economists expected 445,000 initial claims and 4.550 million continuing claims, according to the median estimate from Thomson Reuters.