The municipal market was unchanged with a slightly firmer tone yesterday amid continued fairly light activity in the secondary.
“We’re mostly flat,” a trader in New York said. “There’s a little bit of activity out there, and somewhat of a firmer tone, but we’re just flat. It’s fairly quiet, and it will most likely stay that way the rest of the week.”
“There’s just not much to speak of,” a trader in Los Angeles said. “A lot of people are just hanging back on the sidelines. We’re pretty flat.”
In the new-issue market yesterday, Citi priced $789.8 million of debt for Seattle on behalf of Washington Municipal Light and Power in three series, consisting of tax-exempt bonds, taxable Build America Bonds, and taxable recovery zone bonds.
Bonds from a $594.9 million tax-exempt series of improvement and refunding revenue bonds mature from 2011 through 2026, with yields ranging from 0.93% with a 4% coupon in 2012 to 4.00% with a 5% coupon in 2026. The bonds are callable at par in 2020.
Bonds from a $181.6 million series of taxable BABs mature from 2021 through 2027, with term bonds in 2030 and 2040. Pricing information on the series was not yet available.
Bonds from a $13.3 million series of taxable recovery zone economic development bonds mature in 2040. Pricing information on the series was not yet available.
The credit is rated Aa2 by Moody’s Investors Service and AA-minus by Standard & Poor’s.
JPMorgan priced $677.6 million of revenue bonds for the Florida Hurricane Catastrophe Fund Finance Corp.
The bonds contain split maturities in 2015 and 2016, yielding 3.60% with 3.5%, 4%, and 5% coupons in 2015, and 3.85% with 3.75% and 5% coupons in 2016. The bonds are not callable.
The credit is rated Aa3 by Moody’s, AA-minus by Standard & Poor’s, and AA by Fitch Ratings.
They are being sold by the state-run nonprofit reinsurer ahead of the hurricane season, which begins June 1 and lasts six months.
Proceeds will be used to pay storm-related losses associated with hurricanes Dennis, Katrina, Rita, and Wilma, which battered the South in 2005.
The Treasury market showed some gains yesterday. The benchmark 10-year Treasury note finished at 3.54% after opening at 3.57%. The 30-year Treasury bond finished at 4.43% after opening at 4.48%. The two-year note yield was quoted near the end of the end of the session at 0.85% after opening at 0.87%.
The triple-A municipal scale yielded 2.95% in 10 years yesterday, matching Wednesday, but it was still much stronger than the late March level of 3.09%, according to Municipal Market Data. The 20-year yield was 3.75% and the scale yielded 4.04% in 30 years, both of which also matched Wednesday.
Wednesday’s triple-A muni scale in 10 years was at 82.6% of comparable Treasuries and 30-year munis were at 90.4%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 94.4% of the comparable London Interbank Offered Rate.
Elsewhere in the new-issue market yesterday, Jefferies & Co. priced $117.1 million of taxable and tax-exempt debt for the New York State Municipal Bond Bank.
A total of $61.4 million of the deal was priced as taxable debt. Bonds from the $36.77 million Subseries A2 mature from 2018 through 2025, with a term bond in 2033. The bonds were priced to yield between 135 and 225 basis points over the comparable Treasury yield. The bonds feature an unspecified make-whole call, except bonds maturing in 2033, which are callable at par in 2020.
Bonds from the $24.66 million Subseries B2 mature from 2020 through 2025, and were priced to yield between 185 and 240 basis points over the comparable Treasury yield. The bonds feature an unspecified make-whole call.
Also, $55.7 million of the deal was priced as tax-exempt debt. Bonds from the $28.6 million Subseries A1 mature from 2011 through 2018, with yields ranging from 1.22% with a 3% coupon in 2012 to 3.22% with a 5% coupon in 2018. The bonds are not callable. Bonds maturing from 2014 through 2018 are backed by insurance from Assured Guaranty Municipal Corp. The remaining bonds are uninsured.
Bonds from the $27.2 million Subseries B1 mature from 2011 through 2020, with yields ranging from 1.77% with a 4% coupon in 2013 to 3.70% with a 3.5% coupon in 2020. The bonds are not callable. Bonds maturing from 2014 through 2020 also are backed by AGM. The remaining bonds are uninsured.
The underlying credit on the Subseries A1 and A2 debt is rated A-plus by Standard & Poor’s. The Subseries B1 and B2 bonds are rated A by Standard & Poor’s.
In economic data released yesterday, initial jobless claims fell to 444,000 for the week ending May 8, the fourth straight weekly decline.
Continuing claims increased to 4.627 million for the week ending May 1, the first increase in four weeks.
Economists had expected 440,000 initial claims and 4.570 million continuing claims, according to the median estimate from Thomson Reuters.
Import prices in April rose 0.9%, higher than economists expected and the largest increase since January.
Import prices excluding petroleum increased 0.3% in April. Prices excluding petroleum for March fell 0.1%, revised from the 0.2% decline reported last month.
Economists expected import prices to increase 0.8%, according to the median estimate from Thomson Reuters. Import prices for March were revised lower to a 0.5% increase from a 0.7% gain.