Municipals finished slightly firmer yesterday in light trading activity, while in the new-issue market New York's Metropolitan Transportation Authority sold $600 million of revenue anticipation notes. Traders said tax-exempt yields were lower by about two basis points overall."We're a bit better," a trader in New York said. "There's not a ton of activity, but there's a noticeable firmer tone in the market, and we're better by I'd say as much as three or so basis points in spots. Overall, maybe one or two basis points better. But, it's still fairly quiet."

Trades reported by the Municipal Securities Rulemaking Board yesterday showed some gains. Bonds from an interdealer trade of California 5s of 2034 yielded 6.00%, down one basis point from where they traded Monday. A dealer sold to a customer New York City Municipal Water Finance Authority 4.5s of 2038 at 5.20%, down one basis point from where they were sold Monday. Bonds from an interdealer trade of New York MTA 5.125s of 2029 yielded 5.24%, down three basis points from where they traded Monday. A dealer sold to a customer Puerto Rico Public Buildings Authority 5.5s of 2023 at 6.56%, one basis point lower than where they were sold Monday.

A dealer sold to a customer Colorado Housing and Finance Authority 5s of 2032 at 5.05%, down one basis point from where they traded Monday. Bonds from an interdealer trade of taxable Dallas Area Rapid Transit Build America Bonds, 5.99s of 2044, yielded 5.86%, one basis point lower than where they were sold Monday. A dealer sold to a customer insured New Jersey Transportation Trust Fund Authority 4.75s of 2037 at 5.32%, two basis points lower than where they were sold Monday. Bonds from an interdealer trade of Washington 5s of 2022 yielded 3.87%, down three basis points from where they traded Monday.

"I'd say we're better a good two basis points, but there isn't a whole lot going on," a trader in San Francisco said. "With a pretty light new-issue calendar, just coming off the holiday weekend, you're not going to have too many people really looking to do too much this week. But we definitely firmed up a bit."

The Treasury market was narrowly mixed yesterday. The yield on the benchmark 10-year note, which opened at 3.50%, was quoted near the end of the session at 3.45%. The yield on the two-year note was quoted near the end of the session at 0.97% after opening at 0.94%. The yield on the 30-year bond, which opened at 4.36%, was quoted near the end of the session at 4.29%.

As of Monday's close, the triple-A muni scale in 10 years was at 91.7% of comparable Treasuries, according to Municipal Market Data. Additionally, 30-year munis were 107.1% of comparable Treasuries. Also, as of Monday's close, 30-year tax-exempt triple-A rated general obligation bonds were at 112.6% of the comparable London Interbank Offered Rate.

In the new-issue market yesterday, Barclays Capital priced $600 million of Rans for the New York MTA. The Rans mature in 2009, yielding 0.39% with a 2% coupon. The credit is rated MIG-1 by Moody's Investors Service, SP-1-plus by Standard & Poor's, and F1-plus by Fitch Ratings.

Morgan Stanley priced $188.5 million of revenue bonds for the Arizona Water Infrastructure Finance Authority in two series. Bonds from the $149.7 million new-money series mature from 2009 through 2029, with yields ranging from 0.60% with a 4% coupon in 2010 to 4.51% with a 5% coupon in 2029. Bonds maturing in 2010 were decided via sealed bid. The bonds are callable at par in 2019.

Bonds from the 438.7 million refunding series mature from 2010 through 2017, with yields ranging from 0.60% with a 5% coupon in 2010 to 3.04% with a 4% coupon in 2017. The bonds are not callable. The credit is rated triple-A by all three major ratings agencies.

Citi priced $105 million of transportation infrastructure revenue bonds for the Maine Municipal Bond Bank. The bonds mature from 2010 through 2023, with yields ranging from 1.24% with a 3% coupon in 2011 to 4.08% with a 5% coupon in 2023. Bonds maturing in 2010 were decided via sealed bid. The bonds, which are callable at par in 2019, are rated AA by Standard & Poor's and AA-minus by Fitch.

Jefferies & Co. priced $91.6 million of bonds and bond anticipation notes for Monroe County, N.Y., in three series. Bonds from the $67.1 million Series A public improvement bonds mature from 2010 through 2029, with yields ranging from 2.14% with a 3.75% coupon in 2011 to 5.30% with a 5% coupon in 2029. Bonds maturing in 2010 were not formally re-offered. The bonds are callable at par in 2019, and are insured by Assured Guaranty Corp.

Bonds from the $14.2 million Series B public improvement bonds mature from 2011 through 2029, with yields ranging from 2.14% with a 3.75% coupon in 2011 to 5.30% with a 5.125% coupon in 2029. The bonds are callable at par in 2019, and are insured by Assured Guaranty. The deal also contains a $10.3 million series of bond anticipation notes, which mature in 2010, yielding 3.00% with a 3.5% coupon. The underlying credit is rated Baa2 by Moody's, BBB-plus by Standard & Poor's, and BBB by Fitch.

In a weekly report, Matt Fabian, managing director at Municipal Market Advisors, wrote: "The municipal market is well positioned to start the new month with several potential sources of strength, including seasonal reinvestment - and a weaker stock market - media expectations for scarcity of tax-exempt products, strong buying by banks and mutual funds, and more aggressive risk taking by market makers and the buy-side."

"However, near-term performance may still hinge on California, where the political crisis has prevented budget agreement and longer-term cash flow borrowing," he wrote. "Other downsides include potentially above average monthly supply - alluding to issuers using BABs to increase their leverage and not reduce total borrowing costs, the potential for underperformance of Treasuries if economic trends continue to trend worse, and the bond insurers. Still, there are widespread expectations for strong market performance over the next few weeks. Underpriced areas of the yield curve have begun to find stronger bids and credit spreads may begin to tighten."

The economic calendar was light yesterday.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.