The municipal market was slightly firmer yesterday, with gains mostly found on the long end of the curve, amid fairly light trading activity ahead of the three-day Labor Day weekend.“We’re doing a bit better on the long end again,” a trader in New York said. “There’s not really much activity out there, but the activity you can see is pretty much happening exclusively out long. On the whole, there’s just not a lot going on in the market right now. People are mostly just winding down, getting ready for the long weekend. And really, on the shorter end of the curve, you can’t really see anything. There’s just nothing going on there, we’re totally flat. But out long, you might even be able to pick up three, maybe four basis points, depending on what you’ve got.”
“On the whole, we’re probably better about two basis points, but most of that is on the long end,” a trader in Los Angeles said. “I’m not sure we’re anything but completely flat inside of 20 years. Go beyond that though, and you can see some gains. We’re picking up probably four basis points on the really long end of the curve, and probably scales back from there. But it’s quiet. The secondary is pretty light, there isn’t too much paper out there, and there aren’t a lot of folks participating right now. But I think we’ll see an uptick in activity if not next week, then the week after.”
Trades reported by the Municipal Securities Rulemaking Board yesterday showed gains. A dealer bought from a customer California 5.625s of 2035 at 4.94%, down one basis point from where they traded Wednesday. Bonds from an interdealer trade of Puerto Rico Electric Power Authority 5.25s of 2030 yielded 5.33%, one basis point lower than where they were sold Wednesday. A dealer sold to a customer Texas Transportation Commission 4.75s of 2037 at 4.62%, two basis points lower than where they traded Wednesday.
A dealer bought from a customer Golden State Tobacco Securitization Corp. 5s of 2038 at 5.70%, two basis points lower than where they were sold Wednesday. Bonds from an interdealer trade of Illinois 5s of 2022 yielded 3.98%, two basis points lower than where they traded Wednesday. A dealer sold to a customer Wake County, N.C., 5s of 2023 at 3.52%, three basis points lower than where they traded Wednesday.
A dealer sold to a customer Los Angeles Department of Water and Power 5s of 2044 at 4.63%, two basis points lower than where they traded Wednesday. A dealer sold to a customer King County, Wash., 5s of 2031 at 4.35%, down two basis points from where they were sold Wednesday. A dealer bought from a customer North Texas Tollway Authority 6s of 2028 at 5.21%, down two basis points from where they traded Wednesday.
The Treasury market showed some losses yesterday. The yield on the benchmark 10-year note, which opened at 3.31%, was quoted near the end of the session at 3.34%. The yield on the two-year note was quoted near the end of the session at 0.92% after opening at 0.89%. The yield on the 30-year bond, which opened at 4.12%, was quoted near the end of the session at 4.15%.
As of Wednesday’s close, the triple-A muni scale in 10 years was at 87.0% of comparable Treasuries, according to Municipal Market Data, and 30-year munis were 103.0% of comparable Treasuries. As of the close Wednesday, 30-year tax-exempt triple-A general obligation bonds were at 107.8% of the comparable London Interbank Offered Rate.
In the new-issue market yesterday, South Carolina’s York County School District No. 1 competitively sold $35 million of taxable general obligation Build America Bonds to Morgan Keegan & Co., with a true interest cost of 5.78%. Bidders were given the option to bid for the bonds either as taxable BABs or as tax-exempt debt.
The bonds mature from 2024 through 2032, with coupons ranging from 5.25% in 2024, or 3.41% after the 35% federal subsidy, to 5.80% in 2032, or 3.77% after the subsidy.
Yields range from 5.36% in 2028 to 5.81% in 2032. Bonds maturing from 2024 through 2027 and in 2029 were not formally re-offered. The bonds, which are callable at par in 2019, are rated Aa1 by Moody’s Investors Service and AA by Standard & Poor’s.
Burlington County, N.J., competitively sold $38.9 million of bond anticipation notes to PNC Capital Markets, with a net interest cost of 0.47%. The Bans mature in Sept. 2010, with a 1.5% coupon, and were not formally re-offered.
Wisconsin’s Sun Prairie Area School District competitively sold $23 million of taxable GO qualified school construction bonds to JPMorgan with a TIC of 1.14%. The bonds mature in 2024. Pricing information was not available by press time. The bonds, which are not callable, are rated AA by Standard & Poor’s.
In economic data released yesterday, initial jobless claims for the week ended Aug. 29 came in at 570,000, after a revised 574,000 the previous week. Economists polled by Thomson Reuters had predicted 560,000 initial jobless claims.
Continuing jobless claims for the week ended Aug. 22 came in at 6.234 million, after a revised 6.142 million the previous week. Economists polled by Thomson Reuters had predicted 6.120 million the previous week.
The Institute for Supply Management’s non-manufacturing index gained to 48.4 in August from 46.4 in July. Economists polled by Thomson Reuters predicted the index would rise to 48.0.