The municipal market was mostly flat yesterday as the New Jersey Economic Development Authority came to market with $723.2 million of tax-exempt debt.
“We’re pretty much unchanged at this point,” a trader in New York said. “There are some bits and pieces trading, but for the most part, it’s somewhat quiet on the Street, and we’re flat, maybe better by a basis point in spots on the long end.”
In the new-issue market yesterday, Bank of America Merrill Lynch priced $723.2 million of school facilities construction bonds for the New Jersey EDA in two series.
Bonds from the $674.1 million refunding series mature from 2015 through 2019, with yields ranging from 2.75% with a 3% coupon in 2015 to 3.77% with a 5% coupon in 2019. The bonds are not callable.
Bonds from the $49.1 million new-money series have split maturities in both 2031 and 2032, yielding 4.56% with a 4.5% coupon and 4.51% with a 5% coupon in 2031, and 4.61% with a 4.375% coupon and 4.56% with a 5% coupon in 2032. The bonds are callable at par in 2020.
Andrew Pratt, spokesman for New Jersey’s Treasury Department, said that the average yield on the deal was 3.516%, which was better than they expected. Yields on four maturities declined from retail pricing levels. The issuer sold $165 million of the deal during the retail order period.
Today, the New Jersey authority is set to come to market with $104 million of taxable Build America Bonds, along with $36 million of other taxable bonds, according to Pratt.
The credit is rated Aa3 by Moody’s Investors Service and AA-minus by both Standard & Poor’s and Fitch Ratings.
The Treasury market showed losses yesterday. The benchmark 10-year note finished with a yield of 3.77% after opening at 3.74%. The yield on the two-year finished at 1.04% after opening at 0.99%. The yield on the 30-year bond finished at 4.64% after opening at 4.62%.
The Municipal Market Data triple-A scale yielded 2.97% in 10 years and 3.81% in 20 years yesterday, compared with Wednesday’s levels of 2.98% and 3.82%. The scale yielded 4.10% in 30 years yesterday, compared with 4.11% Wednesday.
Yesterday’s triple-A muni scale in 10 years was at 79.5% of comparable Treasuries and 30-year munis were at 89.0%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 93.0% of the comparable London Interbank Offered Rate.
Elsewhere in the new-issue market, Goldman, Sachs & Co. priced $290.2 million of taxable BABs for the Los Angeles Unified School District.
Bonds from the $190.2 million series mature in 2027, yielding 5.98%, or 3.89% after the 35% federal subsidy. The bonds were priced to yield 137.5 basis points over the comparable Treasury yield.
Bonds from the $100 million series mature in 2027 and were not formally re-offered.
Also, Citi priced $159.5 million of tax-exempt debt for the LAUSD. The bonds mature from 2012 through 2018. Pricing information was not available by press time.
The credit is rated Aa2 by Moody’s and AA-minus by Standard & Poor’s.
Bank of America Merrill Lynch priced $218.7 million of taxable GO debt for the Oregon State Board of Higher Education in two series, including $113.7 million of BABs.
The taxable BABs mature in 2026, 2030, and 2039, yielding 5.01%, 5.33%, and 5.38%, or 3.26%, 3.47%, and 3.50% after the 35% federal subsidy, all priced at par. The bonds were priced to yield between 70 and 125 basis points over the comparable Treasury yield, and have a make-whole call at Treasuries plus 15 basis points.
Bonds from the $73.5 million taxable series mature from 2011 through 2025, with yields ranging from 1.24% in 2011 to 4.96% in 2025, all priced at par. The bonds were priced to yield between 22 and 120 basis points over the comparable Treasury yield, and have a make-whole call at Treasuries plus 15 basis points.
Bank of America Merrill also priced $58.9 million of tax-exempt debt for the Oregon State Board of Higher Education in two series.
Bonds from the $37.6 million series mature from 2016 through 2028, with a term bond in 2033. Yields range from 2.33% with a 4% coupon in 2016 to 4.16% with a 4% coupon in 2033. The bonds are callable at par in 2020.
Bonds from the $21.3 million series mature from 2023 through 2029, with a term bond in 2039. Yields range from 3.49% with a 5% coupon in 2023 to 4.28% with a 5% coupon in 2039. The bonds are callable at par in 2020.
The credit is rated Aa1 by Moody’s, AA by Standard & Poor’s, and AA-plus by Fitch.
In economic data released yesterday, initial jobless claims fell 24,000 to 456,000 in the week ending April 17.
Continuing claims fell to 4.646 million for the week ending April 10.
Economists expected 460,000 initial claims and 4.600 million continuing claims, according to the median estimate from Thomson Reuters.
The producer price index rose 0.7% in March.
Core prices, which exclude food and energy costs, increased 0.1%.
Economists expected producer prices to increase 0.4% and for core prices to increase 0.1%, according to the median estimate from Thomson Reuters.
Existing home sales increased at a 6.8% annual rate to 5.35 million in March.
Economists estimated 5.280 million existing home sales in March, according to the median estimate from Thomson Reuters.