The municipal market was slightly firmer yesterday while the Municipal Market Data triple-A yield curve scale reached historic lows in both 10 and 20 years.
Traders said tax-exempt yields were lower by two or three basis points overall.
“We’re definitely a bit firmer, across the board,” a trader in Los Angeles said. “Things started off pretty quietly today, but now we’re just seeing gains, one, two, three basis point gains, pretty much all along the curve. Probably a bit firmer out long than anywhere else, though, maybe even four basis points or so out past 20 or 25 years.”
“I’d call it better by about three basis points or so on the whole,” a trader in New York said. “Most of the activity is out on the long end, but business is getting done all along the curve.”
The Treasury market showed gains yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.47%, was quoted near the end of the session at 3.39
The yield on the two-year note was quoted near the end of the session at 0.96%, after opening at 0.98%. The yield on the 30-year bond, which opened at 4.26%, was quoted near the end of the session at 4.17%
Yesterday, the MMD triple-A scale dropped to a yield of 2.73% in 10 years and 3.66% in 20 years.
As of Wednesday’s close, the triple-A muni scale in 10 years was at 80.1% of comparable Treasuries, according to Municipal Market Data. Additionally, 30-year munis were 96.2% of comparable Treasuries. Also, as of Wednesday’s close, 30-year tax-exempt triple-A rated general obligation bonds were at 99.5% of the comparable London Interbank Offered Rate.
In the new-issue market yesterday, Siebert Brandford Shank & Co. priced $285.9 million of joint revenue refunding bonds for Dallas and Forth Worth. The bonds mature from 2010 through 2024, with yields ranging from 1.30% with a 4% coupon in 2011 to 4.08% with a 5% coupon in 2024.
Bonds maturing in 2010 were not formally re-offered. The bonds are callable at par in 2016, except for portions of bonds maturing from 2017 through 2019, which are not callable. The bonds are rated A1 by Moody’s Investors Service, A-plus by Standard & Poor’s, and AA-minus by Fitch Ratings.
Merrill Lynch & Co. priced $250 million of sales tax revenue bonds for the Metropolitan Atlanta Rapid Transit Authority.
The bonds mature in 2034, 2036, and 2039, yielding 4.35% with a 4.25% coupon, 4.15% with a 5.25% coupon, and 4.27% with a 5% coupon, respectively. The bonds, which are callable at par in 2019, are rated Aa3 by Moody’s and AA-plus by Standard & Poor’s.
Merrill Lynch priced $149.2 million of higher education revenue bonds for Texas’ Southwest Higher Education Authority. The bonds mature from 2010 through 2029, with term bonds in 2032 and 2036. Yields range from 1.02% with a 2% coupon in 2011 to 4.35% with a 5% coupon in 2036.
Bonds maturing in 2010 were decided via sealed bid. The bonds, which are callable at par in 2019, are rated Aa3 by Moody’s and AA-minus by Standard & Poor’s.
Morgan Stanley priced $99 million of taxable special obligation refunding bonds for the Alabama Incentives Finance Authority. The bonds mature from 2011 through 2019, with term bonds in 2029. Yields range from 1.93% in 2011 to 6.04% in 2029, all priced at par.
The bonds are subject to a make-whole redemption at Treasuries plus 20 basis points for the 2011 through 2019 maturities, and at Treasuries plus 30 basis points for the 2029 maturity. The bonds are rated AA-plus by Standard & Poor’s.
The South Carolina Transportation Infrastructure Bank competitively sold $88.6 million of revenue refunding bonds to Wachovia Bank NA, with a true interest cost of 2.53%.
The bonds mature in 2010, 2011, 2013, 2014, 2016, and 2017, and were not formally re-offered, though all contain 5% coupons. The bonds, which are not callable, are rated A1 by Moody’s and A by Fitch.
Tulsa competitively sold $70 million of GOs to Barclays Capital, with a TIC 2.46%. The bonds mature from 2011 through 2019, with yields ranging from 0.72% with a 4% coupon in 2011 to 2.81% with a 5% coupon in 2019. The bonds, which are not callable, are rated Aa2 by Moody’s and AA by Standard & Poor’s.
In economic data released yesterday, initial jobless claims for the week ended Sept. 12 came in at 545,000, after a revised 557,000 the previous week. Economists polled by Thomson Reuters had predicted 555,000 initial jobless claims.
Continuing jobless claims for the week ended Sept. 5 came in at 6.230 million, after a revised 6.101 million the previous week. Economists polled by Thomson Reuters had predicted 6.110 million continuing claims.
Housing starts came in at 598,000 in August, after a revised 589,000 the previous month. Economists polled by Thomson Reuters had predicted 600,000 housing starts.
Building permits came in at 579,000 in August, after a revised 564,000 the previous month.
