The municipal market was slightly firmer yesterday, mirroring movement in Treasuries, while underwriters priced over $1.6 billion in new issues. Traders said tax-exempt yields were lower by about two basis points overall.“There wasn’t a whole lot of activity, but there was definitely a bit of firmness creeping into the market as the day progressed,” a trader in New York said. “I think we were pretty flat early on, but the market seemed to improve little by little. I think in the end, we’re probably better by a basis point or two, maybe closer to two overall.”
“We’re definitely a little bit better,” a trader in Los Angeles said. “The secondary is still somewhat quiet, but business is getting done. I’d say we’re up a good two basis points, spread pretty evenly throughout the curve.”
The Treasury market showed gains yesterday. The yield on the benchmark 10-year note, which opened at 3.69%, was quoted near the end of the session at 3.54%. The yield on the two-year note was quoted near the end of the session at 1.12% after opening at 1.20%. The yield on the 30-year bond, which opened at 4.42%, was quoted near the end of the session at 4.32%.
As of Wednesday’s close, the triple-A muni scale in 10 years was at 89.3% of comparable Treasuries, according to Municipal Market Data. Additionally, 30-year munis were 106.8% of comparable Treasuries. As of Wednesday’s close, 30-year tax-exempt triple-A general obligation bonds were at 111.6% of the comparable London Interbank Offered Rate.
In the new-issue market yesterday, Merrill Lynch & Co. priced $328.2 million of revenue refunding bonds for the Puerto Rico Public Buildings Authority.
The bonds mature from 2018 through 2021, and in 2023, 2025, 2026, 2030, and 2036. Yields range from 5.90% with a 5.75% coupon in 2018 to 6.90% with a 6.75% coupon in 2036. The bonds are callable at par in 2019, except bonds maturing in 2021 and 2025, which are callable at par in 2014. The credit is rated Baa3 by Moody’s Investors Service and BBB-minus by Standard & Poor’s.
The authority also sold $50 million of refunding bonds, which mature in 2027, yielding 5.50% with a 5.25% coupon. The bonds, which were also priced by Merrill and are callable at par in 2019, are insured by Financial Security Assurance Inc.
Barclays Capital priced $320 million of taxable and tax-exempt revenue bonds for the Port of Seattle. Bonds from the $20.7 million tax-exempt Series A-1 mature in 2027 and 2028, yielding 4.87% and 4.96%, respectively, both with 5.25% coupons. The bonds are callable at par in 2019.
Bonds from the $277.2 million taxable series mature in 2019 and 2036, yielding 5.74% priced at par and 7.26% with a 7% coupon, respectively. The bonds were priced to yield 210 and 287.5 basis points over comparable Treasury yields.
The 2019 bonds have a make-whole call at Treasuries plus 30 basis points. The 2036 bonds are callable at par in 2019. The credit is rated Aa2 by Moody’s, AA-minus by Standard & Poor’s, and AA by Fitch Ratings.
JPMorgan priced $256.8 million of revenue financing bonds for the University of Texas System Board of Regents. The bonds mature from 2010 through 2026, with yields ranging from 1.17% with a 3% coupon in 2011 to 4.38% with a 4.25% coupon in 2026. Bonds maturing in 2010 were decided via sealed bid. The bonds, which are callable at par in 2019, are rated triple-A by all three major ratings agencies.
JPMorgan also priced $250 million of subordinated revenue bonds for the Virgin Islands Public Finance Authority. The bonds mature in 2014, 2019, 2029, and 2037, yielding 5.75% with a 6% coupon, 6.25% with a 6.75% coupon, 6.75% with a 6.625% coupon, and 7.00% with a 6.75% coupon. The bonds, which are callable at par in 2019, are rated Baa3 by Moody’s and BBB-minus by Fitch.
Morgan Stanley priced $235 million of revenue bonds for the Pennsylvania Economic Development Financing Authority. The bonds mature in 2039, yielding 7.00% priced at par. The bonds, which are callable at par in 2019, are rated Baa3 by Moody’s and BBB-minus by Standard & Poor’s and Fitch.
JPMorgan priced $200 million of revenue bonds for the Los Angeles Harbor Department in two series. Bonds from the $100 million Series A mature from 2010 through 2029, with yields ranging from 1.65% with a 3% coupon in 2011 to 5.15% with a 5% coupon in 2029.
Bonds maturing in 2010 were decided via sealed bid. Bonds from the $100 million Series B mature in 2034 and 2039, yielding 5.39% and 5.43%, respectively, both with 5.25% coupons. All the bonds are callable at par in 2019, and are rated Aa2 by Moody’s and AA by Standard & Poor’s and Fitch.
In economic data released yesterday, initial jobless claims for the week ended June 20 came in at 627,000, after a revised 612,000 the week before. Economists polled by Thomson Reuters had predicted 600,000 initial jobless claims.
Continuing jobless claims for the week ended June 13 came in at 6.738 million, after a revised 6.709 million the previous week.
Meanwhile, final first-quarter gross domestic product came in at negative 5.5% after a negative 5.7% reading in the previous estimate.