The municipal market was slightly firmer yesterday, despite some Treasury losses.
"It's up a couple basis points, feeling a bit firmer," a trader in New Jersey said. "It's still a bit hard to find high-grade paper, though. And with non-high-grade paper, pricing is all over the place."
"The market feels pretty firm, especially in short-end," a trader in Chicago added. "There's a shortage of high-grade paper and people are willing to bid it up."
The Treasury market, however, showed some losses yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.90%, finished 3.94%. The yield on the two-year note was quoted near the end of the session at 2.48% after opening at 2.42%. The yield on the 30-year Treasury finished at 4.57% after opening at 4.53%.
In the new-issue market yesterday, Morgan Stanley priced $268.5 million of health system bonds for New York City. The bonds mature from 2009 through 2023, with term bonds in 2025 and 2026. Yields range from 2.40% with a 4% coupon in 2010 to 5.03% with a 5% coupon in 2026. Bonds maturing in 2009 were decided via sealed bid. The bonds, which are callable at par in 2018, are rated A1 by Moody's Investors Service, A-plus by Standard & Poor's, and A by Fitch Ratings.
Citi priced $233.1 million of tobacco settlement asset-backed bonds for New York's Suffolk Tobacco Asset Securitization Corp. in four series. Series A, worth $9.7 million of current interest serial bonds, matures from 2010 through 2018, with yields ranging from 3.87% with a 4% coupon in 2010 to 5.25% with a 5% coupon in 2018. These bonds are not callable. Series B, worth $102.2 million of current interest turbo term bonds, matures in 2028 and 2048, yielding 5.75% with a 5.375% coupon and 6.25% with a 6% coupon, respectively. Series C, worth $107.6 million of convertible capital appreciation turbo term bonds, matures in 2044. And Series D, worth $13.6 million of capital appreciation turbo term bonds, matures in 2048. Bonds from Series A, B, and C are rated BBB-plus by Fitch. Bonds from Series D are rated BBB-minus by Fitch.
The New York Local Government Assistance Corp. competitively sold $207.6 million of refunding bonds to Lehman Brothers, with a true interest cost of 3.21%. The bonds mature from 2009 through 2018, with yields ranging from 2.92% with a 5% coupon in 2013 to 3.54% with a 5% coupon in 2018. Bonds maturing from 2009 through 2012 and in 2018 were not formally re-offered. The bonds, which are not callable, are rated AAA by Standard & Poor's and AA-minus by Fitch.
North Carolina competitively sold $200 million of capital improvement limited obligation bonds to Wachovia Bank NA with a TIC of 4.32%. The bonds mature from 2010 through 2029, with yields ranging from 2.83% with a 4% coupon in 2012 to 4.64% with a 4.5% coupon in 2029. Bonds maturing in 2010, 2011, 2017, 2018, from 2021 through 2024, and from 2026 through 2028 were not formally re-offered. The bonds, which are callable at par in 2018, are rated Aa1 by Moody's and AA-plus by both Standard & Poor's and Fitch.
Merrill Lynch & Co. priced $166.7 million of insured revenue bonds for the California Statewide Communities Development Authority, to benefit Enloe Medical Center. The bonds mature from 2012 through 2020, with term bonds in 2023, 2028, 2033, and 2038. Yields range from 3.82% with a 5% coupon in 2012 to 5.80% with a 5.75% coupon in 2038. The bonds, which are callable at par in 2018, are backed by the California health facility construction loan insurance program. The underlying credit is rated A-plus by Standard & Poor's.
Also, Siebert Brandford Shank & Co. priced $150.8 million of general obligation refunding bonds for the District of Columbia. The bonds mature from 2009 through 2025, with yields ranging from 1.94% with a 3% coupon in 2009 to 4.68% with a 4.5% coupon in 2025. Bonds maturing from 2012 through 2025 are insured by Berkshire Hathaway Insurance Corp. The remaining maturities are uninsured. The underlying credit is rated A1 by Moody's and A-plus by both Standard & Poor's and Fitch. The bonds are callable at par in 2018.
In economic data released yesterday, import prices rose 1.7% in July, after a revised 2.9% climb the previous month. Economists polled by IFR Markets had predicted a 1.0% rise.
Retail sales dipped 0.1% in July, after a revised 0.3% uptick the previous month. Economists polled by IFR Markets predicted no change.
Excluding autos, retail sales rose 0.4% in July, after a revised 0.9% increase the prior month. Economists polled by IFR Markets had predicted a 0.5% uptick.
Business inventories rose 0.7% to $1.490 billion following an upwardly revised 0.4% increase in May to $1.480 billion. IFR Markets had projected that business inventories would be up 0.5% in the month.
Meanwhile, a 1.7% increase in overall business sales brought the category to $1.212 billion. The June figure followed an upwardly revised 1.1% increase in May, and compared to IFR's projected 1.7% increase.
More economic data is on tap at the end of the week. Today, the July consumer price index, initial jobless claims for the week ended Aug. 9, and continuing jobless claims for the week ended Aug. 2 will be released, followed tomorrow by July industrial production, July capacity utilization, and the preliminary August University of Michigan consumer sentiment index.
Economists polled by IFR Markets are predicting a 0.4% rise in CPI, a 0.2% climb in CPI core, 440,000 initial jobless claims, 3.300 million continuing jobless claims, no change in industrial production, 79.8% capacity utilization, and a 62.0 Michigan sentiment index.