The municipal market was slightly firmer yesterday, and the Clark County, Nev., School District came to market with $675 million of general obligation bonds.
"We're firmer about a basis point or two," a trader in New York said. "[Yesterday's economic data] certainly doesn't hurt, but I don't think that's what's driving the market. I think it's just continued demand that's driving yields lower."
Trades reported by the Municipal Securities Rulemaking Board yesterday showed gains. Bonds from an interdealer trade of New York's Metropolitan Transportation Authority 5s of 2031 yielded 4.86%, down three basis points from where they were sold Wednesday. A dealer sold to a customer insured Texas' Lower Colorado River Authority 5s of 2035 at 4.23%, two basis points lower than where they traded Wednesday. A dealer sold to a customer Puerto Rico Sales Tax Financing Corp. 5.25s of 2047 at 5.25%, down two basis points from where they traded Wednesday. Bonds from an interdealer trade of taxable Illinois 5.1s of 2033 yielded 5.48%, three basis points lower than where they were sold Wednesday. Bonds from an interdealer trade of Ohio's Buckeye Tobacco Settlement Financing Authority 6.5s of 2047 yielded 6.85%, down three basis points from where they traded Wednesday.
The Treasury market showed gains. The yield on the benchmark 10-year Treasury note, which opened at 3.92%, finished at 3.83%. The yield on the two-year note was quoted near the end of the session at 2.44% after opening at 2.51%.
In the new-issue market yesterday, the Clark County School District competitively sold $675 million of GO limited-tax building bonds to Merrill Lynch & Co. with a true interest cost of 4.20%. The bonds mature from 2009 through 2028, with yields ranging from 2.45% in 2010 to 4.11% in 2021, all with 5% coupons. Bonds maturing in 2009, 2011, 2018, and from 2022 through 2028 were not formally re-offered. The bonds, which are callable at par in 2018, are rated Aa2 by Moody's Investors Service, and AA by both Standard & Poor's and Fitch Ratings.
UBS Securities LLC priced $157.3 million of hospital refunding revenue bonds for Florida's South Broward Hospital District. The bonds mature from 2009 through 2014 and in 2016 and 2017, with term bonds in 2022, 2028, and 2036. Yields range from 2.30% with a 4% coupon in 2009 to 5.21% with a 5% coupon in 2036. The bonds, which are callable at par in 2018, are rated Aa3 by Moody's and AA-minus by Standard & Poor's.
Citi priced $151.2 million of hospital revenue refunding bonds for the Scottsdale, Ariz., Industrial Development Authority. The bonds mature from 2008 through 2023, with a term bond in 2030. Yields range from 2.73% with a 5% coupon in 2008 to 5.52% with a 5.25% coupon in 2030. The bonds are callable at par in 2018, except for bonds maturing in 2030, which are callable at par in 2013. The credit is rated A3 by Moody's, BBB-plus by Standard & Poor's, and A-minus by Fitch.
Banc of America Securities LLC priced $85.2 million of tax-exempt and taxable excise tax revenue bonds for Glendale, Ariz., in two series. Bonds from a $32.7 million tax-exempt series mature in 2011, and from 2015 through 2022, with term bonds in 2028 and 2032. Yields range from 2.73% with a 3% coupon in 2011 to 4.75% with a 4.5% coupon in 2032. The bonds are callable at par in 2018. The deal also contains a $52.5 million taxable series, which matures in 2018, 2025, and 2033. The bonds are insured by Financial Security Assurance Inc. The underlying credit is rated Aa3 by Moody's and AA-plus by Standard & Poor's.
In economic data released yesterday, initial jobless claims for the week ended May 10 came in at 371,000 after coming in at 365,000 the previous week. Economists polled by IFR Markets had predicted 370,000 initial jobless claims.
Continuing jobless claims for the week ended May 3 came in at 3.060 million, after a revised 3.020 million the prior week. Economists polled by IFR had predicted 3.035 million continuing jobless claims.
The Empire State Manufacturing Survey "indicates that manufacturing activity in New York deteriorated slightly in May," as the general business conditions index slipped back into negative territory, at negative 3.23 in May from a positive 0.63 reading in April. Economists surveyed by IFR had expected the index would be zero.
Industrial production in the nation was down 0.7% in April while capacity utilization fell to 79.7. The drop in production level followed a 0.2% increase in March, while capacity use was 80.4. IFR Markets had forecast a 0.3% decrease in production, and an 80.1% level for capacity utilization.
Also, manufacturing activity in the Federal Reserve Bank of Philadelphia's region "showed continued weakness this month," although the general business conditions index narrowed to negative 15.6 in May from negative 24.9 in April, this month's Report on Business indicates. Economists surveyed by IFR predicted a reading of negative 20.0 for the index.
Today, more economic data will be released. April housing starts and building permits will be released, alongside the preliminary May University of Michigan consumer sentiment index. Economists polled by IFR Markets are predicting 940,000 housing starts, 915,000 building permits, and a 62.5 level for the Michigan sentiment index.
