The municipal market was slightly firmer yesterday. Traders said tax-exempt yields were lower by about one or two basis point in spots.
“We’re somewhat flat, but there’s some decent activity out there,” a trader in New York said. “I’d say there’s a bit of a firmer tone. Maybe you can pick up a basis point or so here and there.”
“It definitely feels somewhat better,” a trader in Los Angeles said. “Probably only a basis point or two, maybe three depending on the credit, but I’d definitely call it slightly better.”
The Treasury market was somewhat mixed yesterday. The benchmark 10-year note finished with a yield of 3.60% after opening at 3.62%. The yield on the two-year finished at 0.85% after opening at 0.81%. The yield on the 30-year bond finished at 4.56% after opening at 4.59%.
The Municipal Market Data triple-A scale yielded 2.80% in 10 years and 3.78% in 20 years yesterday, following Wednesday’s levels of 2.83% and 3.80%, respectively. The scale yielded 4.14% in 30 years yesterday, following 4.16% Wednesday.
Wednesday’s triple-A muni scale in 10 years was at 78.2% of comparable Treasuries and 30-year munis were at 90.8%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 95.0% of the comparable London Interbank Offered Rate.
In the new-issue market yesterday, Morgan Keegan & Co. priced $99 million of refunding bonds for the New Hampshire Municipal Bond Bank.
The bonds mature from 2010 through 2022, with yields ranging from 0.35% with a 3% coupon in 2010 to 3.29% with a 3.25% coupon in 2022.
The bonds, which are callable at par in 2020, are rated Aa2 by Moody’s Investors Service, AA by Standard & Poor’s, and AAA by Fitch Ratings.
JPMorgan priced $84.9 million of revenue bonds for the Connecticut Health and Educational Facilities Authority in two series.
Bonds from the $73.8 million Series O mature in 2030, 2035, and 2040, yielding 4.80% with a 4.75% coupon, 5.00% priced at par, and 5.05% with a 5% coupon, respectively.
Bonds from the $11.1 million Series P mature from 2010 through 2022, with a term bond in 2028. Yields range from 0.90% with a 2% coupon in 2010 to 4.63% with a 5% coupon in 2028.
The bonds, which are callable at par in 2020, are rated A3 by Moody’s and A-minus by Standard & Poor’s.
Pricing information was released on the $1.2 billion of Project J taxable Build America Bonds for the Municipal Electric Authority of Georgia. The week’s largest transaction was priced by Goldman, Sachs & Co. Wednesday.
The BABs mature in 2057, yielding 6.637%, or 4.31% after the 35% federal subsidy.
The bonds were priced to yield 205 basis points over the comparable Treasury yield, and contain a make-whole call at Treasuries plus 35 basis points.
Goldman Sachs will also price $972.9 million of Project M bonds for MEAG. Sources at Goldman yesterday indicated the bonds may be priced as early as today.
The Project M bonds consist of $953.2 million of taxable BABs in Series 2010A to mature from 2019 to 2057, and $19.7 million of tax-exempt bonds in Series 2010B to mature from 2017 to 2029 and in 2040.
The MEAG deal also includes Project P bonds that total $419.1 million, and will price at a later date.
They are structured as $410.8 million of taxable BABs in Series 2010A to mature from 2018 to 2057, and $8.24 million of tax-exempts in Series 2010B maturing from 2017 to 2020 and in 2040.
The Series J and M bonds are rated A2 by Moody’s and A-plus by both Standard & Poor’s and Fitch. The Series P bonds are rated Baa2 by Moody’s and A-minus by Standard & Poor’s and Fitch.
Proceeds from the billion-dollar sale will be used to finance the construction of new projects, including MEAG’s share of two new nuclear units at its Plant Vogtle facility.
In economic data released yesterday, initial jobless claims decreased to 469,000 for the week ending Feb. 27, in line with economists’ estimates.
Continuing claims dropped to 4.5 million for the week ending Feb. 20, the lowest level in more than a year following two weekly increases.
Economists expected 469,000 initial jobless claims and 4.6 million continuing claims, according to the median estimate from Thomson Reuters.
U.S. nonfarm productivity increased at a 6.9% annual rate in the fourth quarter ended Dec. 31, revised higher from a 6.2% increase reported last month.
Productivity in the third quarter was revised to a 7.8% gain from the previously reported 7.2% rise. For all of 2009, productivity increased 5.8%.
Unit labor costs fell 5.9%, compared to the 4.4% drop reported in the preliminary data and a 7.6% decline in the third quarter.
Economists polled by Thomson Reuters expected productivity to be revised to a 6.2% increase and for unit labor costs to be revised to a 4.4% decline.
New factory orders for manufactured goods increased 1.7% in January, meeting economists’ estimates.