Munis Mostly Flat; N.J. TTFA Offers $1.06B

The municipal market was mostly flat Wednesday amid moderate secondary trading activity.

Traders said tax-exempt yields carried a slightly weaker tone through much of the day, but faded in the second half.

“I’d say we’re probably flat on the whole at this point,” a trader in  New York said. “If there’s any weakness out there, it’s out long, and pretty light. The weakness mostly faded after the bigger competitive deals priced.”

The Municipal Market Data triple-A scale yielded 2.31% in 10 years Wednesday, up one basis point from Tuesday’s 2.30%, while the 20-year scale climbed one basis point to 3.31% from Tuesday’s 3.30%. The scale for 30-year debt yielded 3.73%, two basis points higher than Tuesday’s 3.71%.

“There was pretty decent activity in the afternoon,” a trader in Los Angeles said. “Particularly with high grades. On the whole, I’d say we were flat, maybe with a little weakness out long.”

Wednesday’s triple-A muni scale in 10 years was at 95.0% of comparable Treasuries and 30-year munis were at 97.6%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 108.2% of the comparable London Interbank Offered Rate.

The Treasury market showed little movement Wednesday. The benchmark 10-year note was quoted near the end of the session at 2.43% after also opening at 2.43%.

The 30-year bond finished at 3.82% after also opening at 3.82%. The two-year note was quoted near the end of the session at 0.37% after also opening at 0.37%.

The Treasury Department Wednesday auctioned $21 billion of 10-year notes with a 2 5/8% coupon at a 2.475% high yield and a price of 101.30. The bid-to-cover ratio was 2.99. Federal Reserve banks bought $184.5 million for their own accounts in exchange for maturing ­securities.

In the new-issue market Wednesday, Barclays Capital took indications of interest on $1.06 billion of taxable Build America Bonds for the New Jersey Transportation Trust Fund Authority, ahead of Thursday’s institutional pricing.

The BABs contain a split maturity in 2028, and could be priced at approximately 190 and 225 basis points over the 30-year Treasury yield at institutional pricing.

The BABs are part of a $1.56 million deal the New Jersey TTFA is bringing to market Thursday, which includes $484.7 million of tax-exempt transportation system bonds priced for retail investors Wednesday.

The bonds mature from 2016 through 2024, with yields ranging from 2.28% with a 3% coupon in 2016 to 3.97% with a 5% coupon in 2024. The bonds are not callable.

The deal also contains a $15.3 million series of taxable debt, which will mature in 2017 at a yield about 160 basis points higher than the seven-year Treasury.

The credit is rated Aa3 by Moody’s Investors Service and AA-minus by Standard & Poor’s and Fitch Ratings.

Bank of America Merrill Lynch priced $272.2 million of debt for the Trinity Health Credit Group on behalf of five issuers.

The largest piece, worth $131.5 million, was from the Michigan Finance Authority. The bonds mature from 2011 through 2020, with term bonds in 2025 and 2027.

Yields range from 1.38% with a 3% coupon in 2012 to 4.21% with a 5% coupon in 2027. Bonds maturing in 2011 were decided via sealed bid. The bonds are callable at par in 2020.

A $64.3 million piece from the Indiana Finance Authority matures in 2019, 2020, 2028, and 2037, with yields ranging from 3.37% with a 3.25% coupon in 2019 to 4.58% with a 5% coupon in 2037. The bonds are callable at par in 2020.

A $26.5 million component from Franklin County, Ohio, matures from 2011 through 2014 with a term bond in 2037.

Yields range from 0.95% with a 2.5% coupon in 2011 to 4.68% with a 4.5% coupon in 2037. The bonds are callable at par in 2020.

A $28.9 million piece from the Idaho Health Facilities Authority matures in 2037, yielding 4.56% with a 4.5% coupon. The bonds are callable at par in 2020.

A $21.0 million component from Oregon’s Ontario Hospital Facility Authority contains a split maturity in 2037, yielding 4.57% with a 4.5% coupon and 4.43% with a 5% coupon. The bonds are callable at par in 2020.

The bonds are rated Aa2 by Moody’s and AA by both Standard & Poor’s and Fitch.

Siebert Brandford Shank & Co. priced $267.0 million of debt for Los Angeles, including $177.4 million of taxable BABs.

The BABs mature in 2039, yielding 5.713% priced at par, or 3.71% after the 35% federal subsidy.

The bonds were priced to yield 185 basis points over the 30-year Treasury yield.

The deal also contains $89.6 million of taxable recovery zone economic development bonds, which mature in 2040, yielding 5.813% priced at par. The bonds were priced to yield 195 basis points over the 30-year Treasury yield.

The credit is rated Aa2 by Moody’s, AA by Standard & Poor’s, and AA-plus by Fitch.

JPMorgan priced $175.7 million of general obligation refunding bonds for Utah.

The bonds mature from 2016 through 2019, with yields ranging from 1.40% with a 4% coupon in 2016 to 2.11% with a 4.5% coupon in 2019.

The bonds, which are not callable, are rated triple-A by all three major ratings agencies.

In economic data released Wednesday, import prices dropped 0.3% in September. Import prices for August were unrevised at a 0.6% increase.

Economists expected a 0.2% decline in import prices, according to the median estimate from Thomson Reuters.

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