The municipal market was slightly firmer yesterday. Traders said tax-exempt yields were lower by about three basis points overall.
“We’re probably a good three basis points better,” a trader in Los Angeles said. “It’s a bit spotty, but it’s about three basis points better throughout the curve, though in places it’s more or less. There was some decent trading activity in the secondary, though mostly the more intermediate paper. I didn’t see much happening out long.”
“There’s a little bit of firmness out there,” a trader in New York said. “There’s some decent activity out in the secondary as well. There is definitely business getting done.”
The Treasury market mostly showed some losses yesterday. The yield on the benchmark 10-year note opened at 3.32% and finished at 3.37%. The yield on the two-year note opened at 0.76% and finished unchanged. The yield on the 30-year bond finished at 4.30% after opening at 4.25%.
Yesterday’s Municipal Market Data triple-A scale yielded 2.87% in 10 years and 3.80% in 20 years, after levels of 2.89% and 3.80%, respectively, Tuesday. The scale yielded 4.33% in 30 years yesterday, after Tuesday’s level of 4.33%.
As of Tuesday’s close, the triple-A muni scale in 10 years was at 86.8% of comparable Treasuries, according to MMD, while 30-year munis were 101.9% of comparable Treasuries. Also, as of Tuesday’s close, 30-year tax-exempt triple-A rated general obligation bonds were at 105.9% of the comparable London Interbank Offered Rate.
In the new-issue market yesterday, Wells Fargo Securities priced $366.4 million of water and sewer system revenue bonds for Charlotte, N.C.
The bonds mature from 2012 through 2030, with term bonds maturing in 2033, 2038, and 2039. Yields range from 0.98% with a 4% coupon in 2012 to 4.65% with a 4.5% coupon in 2039.
The bonds, which are callable at par in 2020, are rated Aa1 by Moody’s Investors Service and AAA by both Standard & Poor’s and Fitch Ratings.
JPMorgan priced $298.5 million of bonds for Children’s Healthcare of Atlanta in two series.
Bonds from the $247.7 million series mature from 2010 through 2021, with term bonds in 2024, 2029, 2034, and 2039. Yields range from 1.72% with a 5% coupon in 2011 to 5.40% with a 5.25% coupon in 2039. Bonds maturing in 2010 were decided via sealed bid.
Bonds from the $50.8 million series mature from 2010 through 2021, with term bonds in 2029, 2034, and 2039. Yields range from 1.72% with a 5% coupon in 2011 to 5.40% with a 5.25% coupon in 2039. Bonds maturing in 2010 were decided via sealed bid.
The bonds, which are all callable at par in 2019, are rated Aa2 by Moody’s and AA by Standard & Poor’s.
Kentucky’s Louisville and Jefferson County Metropolitan Sewer District competitively sold $180 million of taxable Build America Bonds to Bank of America Merrill Lynch, with a true interest cost of 6.04%.
The bonds mature in 2040, with a 5.98% coupon, or 3.89% after the 35% federal subsidy. The bonds, however, were not formally re-offered.The bonds are rated A2 by Moody’s, AA-minus by Standard & Poor’s, and A-plus by Fitch.
Clark County, Nev., competitively sold $111.6 million of GO refunding bonds to Morgan Stanley with a TIC of 4.47%.
The bonds mature from 2010 through 2029, with coupons ranging from 2% to 5%. None of the bonds were formally re-offered.
The bonds, which are callable at par in 2019, are rated Aa1 by Moody’s and AA-plus by Standard & Poor’s.
Montgomery County, Md., competitively sold $78 million of consolidated public improvement bonds to Bank of America Merrill Lynch, with a TIC of 1.18%.
The bonds mature from 2010 through 2014, with coupons ranging from 2% to 5%. Bonds maturing in 2012 yielded 0.84% with a 5% coupon. None of the remaining bonds were formally re-offered.
The bonds, which are not callable, are rated triple-A by all three major ratings agencies.
Also, more detailed pricing information was released on Tuesday’s Goldman, Sachs & Co.-priced sale of close to $1.5 billion of state personal income tax revenue bonds for the Empire State Development Corp., on behalf of the New York State Urban Development Corp., including $576.1 million of taxable BABs.
The BAB series matures in 2039, yielding 5.77% priced at par, or 3.75% after the 35% federal subsidy. The bonds were priced to yield 150 basis points over the comparable Treasury yield.
The $223.2 million taxable series matures from 2010 through 2013, yielding 1.32% in 2011, 2.03% in 2012, and 2.48% in 2013. Bonds maturing in 2010 were not formally re-offered. The bonds were priced to yield between 55 and 120 basis points over the comparable Treasury yield.
The tax-exempt component of approximately $673 million was priced with a top yield of 5% in 2022. The bonds are rated AAA by Standard & Poor’s and AA-minus by Fitch.
In economic data released yesterday, the consumer price index rose 0.3% in October. Core consumer prices, which exclude food and energy costs, increased 0.2% for the month.
Economists polled by Thomson Reuters expected the CPI to increase 0.5% in October and core prices to increase 0.1%, according to the median estimate. Total consumer prices and core prices each rose 0.2% in September.