The municipal market was firmer Tuesday as the Los Angeles Department of Water and Power priced $760.2 million of taxable Build America Bonds and participants began looking toward the impending Thanksgiving holiday.
“It was busier earlier on, but as the session waned, so did the interest of a lot of people in getting deals done,” a trader in Los Angeles said. “It’s been a turbulent little stretch of time here this month, but it looks like people are shifting their focus away from munis and onto turkey finally. With that said, we’re better about three basis points or so.”
In the new-issue market Tuesday, Goldman, Sachs & Co. priced $760.2 million of taxable BABs for the Los Angeles DWP.
The BABs mature in 2041 and 2045. Bonds maturing in 2041 yield 7.00% priced at par, or 4.55% after the 35% federal subsidy. Bonds maturing in 2045 were priced to yield 240 basis points over the 30-year Treasury yield.
The credit is rated Aa3 by Moody’s Investors Service and AA-minus by both Standard & Poor’s and Fitch Ratings.
Also, Citi priced $755.8 million of transportation revenue bonds for the New York Metropolitan Transportation Authority.
The bonds mature from 2011 through 2030, with term bonds in 2034 and 2040. Yields range from 1.25% with a 2% coupon in 2012 to 5.45% with a 5.25% coupon in 2040.
The bonds, which are callable at par in 2020, are rated A2 by Moody’s, A by Standard & Poor’s, and A-plus by Fitch.
The Municipal Market Data triple-A scale yielded 2.82% in 10 years Tuesday, down five basis points from Monday’s 2.87%, while the 20-year scale yielded 3.97%, down five basis points from Monday. The scale for 30-year debt dropped five basis points to 4.31% Tuesday from 4.36% Monday.
Tuesday’s triple-A muni scale in 10 years was at 102.2% of comparable Treasuries and 30-year munis were at 103.4%, according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 111.9% of the comparable London Interbank Offered Rate.
The Treasury market showed gains Wednesday. The benchmark 10-year note was quoted near the end of the session at 2.77% after opening at 2.81%. The 30-year bond was quoted near the end of the session at 4.18%, after opening at 4.21%. The two-year note was quoted near the end of the session at 0.46% after opening at 0.48%.
Elsewhere in the new-issue market Tuesday, Massachusetts competitively sold $350 million of taxable BABs to Jefferies & Co.
The BABs mature in 2021, yielding 3.98% with a 4.2% coupon, or 2.59% after the 35% federal subsidy.
The credit is rated Aa1 by Moody’s, AA by Standard & Poor’s, and AA-plus by Fitch.
Morgan Stanley priced $314.1 million of tax-exempt and taxable debt for Colorado’s Regional Transportation District in two series, including $100 million of taxable BABs.
Bonds from the $214.1 million tax-exempt series mature from 2011 through 2022, with term bonds in 2025 and 2031. Yields range from 1.50% with a 3% coupon in 2012 to 5.50% with a 5.375% coupon in 2031. Bonds maturing in 2011 were not formally re-offered. These bonds are callable at par in 2020.
Bonds from the $100 million BAB series mature in 2040, yielding 7.672% priced at par, 4.99% after the 35% federal subsidy. The bonds were priced to yield 350 basis points over the 30-year Treasury yield. These bonds are subject to a make-whole redemption at Treasuries plus 50 basis points.
The credit is rated Aa3 by Moody’s, A-minus by Standard & Poor’s, and AA-minus by Fitch.
JPMorgan priced $154 million of tax-exempt revenue bonds for the Louisiana Local Government Environmental Facilities and Community Development Authority in two series.
Bonds from the $89 million Series A-1 mature in 2035, yielding 6.50% priced at par. These bonds are callable at par in 2020.
Bonds from the $65 million Series A-2 also mature in 2035, yielding 6.50% priced at par. These bonds are callable at par in 2020.
The credit is rated Ba2 by Moody’s and BBB-minus by Standard & Poor’s.
Also, Loop Capital Markets priced $63.5 million of GO refunding warrants for Birmingham, Ala.
The bonds mature from 2011 through 2018, with yields ranging from 0.50% with a 3% coupon in 2011 to 3.18% with a 5% coupon in 2018.
The bonds, which are not callable, are rated Aa2 by Moody’s and AA by both Standard & Poor’s and Fitch.
In economic data released Tuesday, real gross domestic product increased 2.5% in the third quarter, revised higher from 2.0% growth seen in the advance estimate last month and exceeding economists’ estimates as the core personal consumption expenditures number was unrevised.
Core personal consumption expenditures, the Federal Reserve’s preferred measure of inflation, increased 0.8% for the quarter, unrevised from the initial estimate and the smallest quarterly increase since 2008.
Economists expected GDP would increase 2.4% for the quarter and core PCE would increase 0.8%, according to the median estimate from Thomson Reuters.
Existing home sales fell 2.2% in October to a seasonally adjusted 4.43 million. Sales in September were unchanged at 4.53 million. Economists expected 4.50 million sales for the month, according to the median estimate from Thomson Reuters.