Tax-exempts were firmer by three to five basis points yesterday, while the Allegheny County, Pa., Hospital Development Authority came to market with one of the week's largest scheduled new-issue transactions.
RBC Capital Markets priced $400 million of revenue bonds for the authority, with serial maturities from 2010 through 2024, and term bonds in 2029, 2034, and 2039. Yields range from 2.79% with a 4% coupon in 2011 to 5.75% with a 5.625% coupon in 2039. Bonds maturing in 2010 will be decided via sealed bid. The bonds are callable at par in 2019, except for the $25 million 2034 maturity, which is callable in 2014. The credit is rated Aa3 by Moody's Investors Service, A-plus by Standard & Poor's, and AA-minus by Fitch Ratings.
Traders said tax-exempt yields in the secondary market were lower by two or three basis points.
"We're somewhat quiet, with a little more activity than yesterday, though," a trader in New York said. "And we're a bit firmer, for sure, pretty much across the board."
"We started off the day better, and I think we picked up some steam as we went along, too," a trader in San Francisco said. "We probably ended up a good three, four, even five basis points better in spots."
Trades reported by the Municipal Securities Rulemaking Board yesterday showed gains. A dealer sold to a customer Georgia 5s of 2022 at 3.32%, down two basis points from where they were sold Tuesday. A dealer sold to a customer Texas 5.25s of 2024 at 3.25%, down three basis points from where they traded Tuesday. Bonds from an interdealer trade of Virginia Housing Development Authority 4.85s of 2025 yielded 5.02%, down five basis points from where they traded Tuesday. A dealer sold to a customer California 5.625s of 2025 at 5.00%, five basis points lower than where they were sold Tuesday. A dealer sold to a customer New Jersey Turnpike Authority Build America Bonds, 7.41s of 2040 at 6.47%, four basis points lower than where they were sold Tuesday.
The Treasury market showed some gains yesterday. The yield on the benchmark 10-year note, which opened at 3.24%, was quoted near the end of the session at 3.19%. The yield on the two-year note was quoted near the end of the session at 0.84% after opening at 0.88%. The yield on the 30-year bond, which opened at 4.21%, was quoted near the end of the session at 4.15%.
As of Tuesday's close, the triple-A muni scale in 10 years was at 86.7% of comparable Treasuries, according to Municipal Market Data. Additionally, 30-year munis were 104.5% of comparable Treasuries. Also, as of the close Tuesday, 30-year tax-exempt triple-A rated general obligation bonds were at 116.4% of the comparable London Interbank Offered Rate.
Elsewhere in the new-issue market yesterday, Morgan Stanley priced $312.4 million of utility system revenue bonds for the Orlando Utilities Commission in two series. Bonds from the $114.6 million Series B mature in 2023, 2028, 2029, and 2033, yielding 4.05%, 4.62%, 4.70%, and 4.85%, respectively, all with 5% coupons. The bonds are callable at par in 2019. Bonds from the $197.8 million Series B-1 mature in 2010, yielding 0.47% with a 2% coupon. They are not callable. The short-term debt is rated MIG-1 by Moody's, SP-1-plus by Standard & Poor's, and F1-plus by Fitch. The long-term bonds are rated Aa1 by Moody's and AA by both Standard & Poor's and Fitch.
Massachusetts competitively sold $250 million of GOs to Merrill Lynch & Co. with a true interest cost of 4.24%. The bonds mature from 2020 through 2029, with term bonds in 2034 and 2038. Yields range from 3.18% with a 5% coupon in 2020 to 4.50% priced at par in 2038. The bonds, which are callable at par in 2019, are rated Aa2 by Moody's and AA by Standard & Poor's and Fitch.
Massachusetts also competitively sold $71 million of taxable debt to JPMorgan with a TIC of 2.88%. The bonds mature from 2010 through 2016. Pricing information was not available by press time.
Merrill Lynch priced $151.6 million of variable-rate limited obligation refunding revenue bonds for the Michigan Strategic Fund in three series. Bonds from the $60 million series mature in 2029, yielding 5.25% priced at par. Bonds from the $59.2 million series mature in 2029, yielding 5.50% priced at par. Bonds from the $32.4 million series mature in 2020, yielding 5.625% priced at par. None of the bonds are callable. The credit is rated A3 by Moody's and A-minus by Standard & Poor's and Fitch.
Morgan Stanley priced $129.9 million of bond anticipation notes for the Municipal Electric Authority of Georgia in two series. Bans from the $64.1 million series mature in 2010, yielding 0.48% with a 2% coupon. Bans from the $65.8 million series mature in 2010, yielding 1.90% with a 2.25% coupon. The credit is rated MIG-1 by Moody's, SP-1-plus by Standard & Poor's, and F1-plus by Fitch.
Lake Oswego, Ore., competitively sold $60 million of full faith and credit obligations to Wachovia Bank NA, with a TIC of 4.03%. The bonds mature from 2012 through 2029, with term bonds in 2031, 2033, and 2034. Yields range from 1.37% with a 3% coupon in 2012 to 4.55% with a 4.5% coupon in 2034. The bonds, which are callable at par in 2019, are rated Aa1 by Moody's and AAA by Standard & Poor's.
The Kansas Development Finance Authority competitively sold $49.4 million of revenue bonds to Robert W. Baird & Co. with a TIC of 3.17%. The bonds mature from 2012 through 2019, with yields ranging from 2.00% with a 3% coupon in 2013 to 3.55% with a 4% coupon in 2019. Bonds maturing in 2012 were not formally re-offered. The bonds, which are not callable, are rated A1 by Moody's and AA by Standard & Poor's.
The economic calendar was light yesterday.