The municipal market was unchanged to slightly firmer yesterday. Traders said tax-exempt yields were flat to better by about two basis points overall.
“There’s a bit of a firmer tone out there,” a trader in New York said. “It’s reasonably quiet, but there is some business getting done. You could call it unchanged and not really be that off. It’s maybe a basis point or two better, if anything, but more so on the longer end. The short end of the curve is really pretty flat. But there’s definitely somewhat of a firmer tone.”
“The long end is actually quite a bit firmer, more than just a couple of basis points,” a trader in Los Angeles said. “I’d say a good four or five out long, maybe even more when you get to like 30 years. But there isn’t really much movement inside of 20 years. There’s significantly more movement between 20 and 30 years than there is inside of that.”
The Treasury market showed some gains yesterday. The yield on the benchmark 10-year note opened at 3.43% and was quoted near the end of the session at 3.41%. The yield on the two-year note opened at 0.76% and finished at 0.74%. The yield on the 30-year bond was quoted near the end of the session at 4.37% after opening at 4.38%.
Yesterday’s Municipal Market Data triple-A scale yielded 2.73% in 10 years and 3.61% in 20 years, following levels of 2.73% and 3.63% on Monday. The scale yielded 4.08% in 30 years yesterday, after Monday’s level of 4.18%.
As of Monday’s close, the triple-A muni scale in 10 years was at 79.1% of comparable Treasuries, according to MMD, while 30-year munis were 94.6% of comparable Treasuries and 30-year tax-exempt triple-A rated general obligation bonds were at 98.4% of the comparable London Interbank Offered Rate.
In the new-issue market yesterday, New Jersey competitively sold $205 million of tax-exempt GOs to Bank of America Merrill Lynch, with a true interest cost of 3.71%.
The bonds mature from 2011 through 2030, with yields ranging from 3.15% with a 5% coupon in 2020 to 3.48% with a 5% coupon in 2024. Bonds maturing from 2011 through 2019, in 2023, and from 2025 through 2030 were sold but not available.
The bonds, which are callable at par in 2019, are rated Aa3 by Moody’s Investors Service, AA by Standard & Poor’s, and AA-minus by Fitch Ratings.
Jefferies & Co. priced $149 million of project revenue bonds for the Massachusetts State College Building Authority, including $66.4 million of taxable Build America Bonds.
The BABs mature in 2019, 2019, 2025, 2030 and 2040, with yields ranging from 4.584% in 2018, or 2.98% after the 35% federal subsidy, to 5.932% in 2040, or 3.86% after the subsidy, all priced at par. The bonds were priced to yield between 120 and 190 basis points over the comparable Treasury yields, and contain a make-whole call at Treasuries plus 25 basis points.
The $82.5 million tax-exempt Series B matures from 2011 through 2030, with term bonds in 2035 and 2040. Yields range from 0.80% with a 2% coupon in 2011 to 4.59% with a 5% coupon in 2040. The bonds are callable at par in 2020.
The credit is rated Aa3 by Moody’s and AA-minus by Standard & Poor’s.
The Louisville-Jefferson County, Ky., Water Works Board competitively sold $121 million of water system revenue and refunding bonds to Citi with a TIC of 2.57%.
The bonds mature from 2010 through 2025, with yields ranging from 1.77% with a 5% coupon in 2015 to 3.26% with a 4.5% coupon in 2023. Bonds maturing from 2010 through 2014, and in 2018, 2019, 2024, and 2025 were not formally re-offered.
The bonds, which are callable at par in 2019, are rated Aa1 by Moody’s and AAA by Standard & Poor’s.
JPMorgan priced $86 million of general airport revenue bonds for Manchester, N.H., in two series.
Bonds from the $65.2 million Series A mature from 2011 through 2021, with term bonds in 2024 and 2030. Yields range from 2.00% with a 5% coupon in 2011 to 5.20% with a 5.125% coupon in 2030. Bonds maturing in 2016, 2019, 2020, 2021, 2024, and 2030 were insured by Assured Guaranty Corp. The bonds are callable at par in 2019.
Bonds from the $20.7 million Series B mature from 2011 through 2015, with yields ranging from 2.00% with a 5% coupon in 2011 to 3.57% with a 5% coupon in 2015. The bonds are not callable.
The underlying credit is rated A3 by Moody’s and A-minus by both Standard & Poor’s and Fitch.
Wells Fargo Securities priced $81.1 million of lease revenue bonds for Salt Lake County Municipal Building Authority in two series, including $58.3 million of taxable BABs.
The BABs mature from 2018 through 2021, with term bonds in 2024 and 2029. Yields range from 4.53% in 2018, or 2.94% after the 35% federal subsidy, to 5.82% in 2029, or 3.78% after the subsidy. The bonds were priced to yield between 115 and 190 basis points over the comparable Treasury yields, and contain a make-whole call at Treasuries plus 25 basis points.
The $22.8 million tax-exempt Series A matures from 2010 through 2017, with yields ranging from 0.50% with a 3% coupon in 2010 to 2.75% with a 5% coupon in 2017. The bonds are not callable.
The credit is rated Aa1 by Moody’s and AA-plus by Standard & Poor’s and Fitch.
Raymond James & Associates priced $74.2 million of subordinate water revenue bonds for the Birmingham, Ala., Water Works Board. The bonds mature from 2010 through 2029, with yields ranging from 1.60% with a 3% coupon in 2010 to 4.98% with a 4.75% coupon in 2029. The bonds, which are callable at par in 2019, are rated A3 by Moody’s and A-plus by Standard & Poor’s.
Morgan Stanley priced $52.3 million of revenue bonds for the South Lake County, Fla., Hospital District.
The bonds mature from 2013 through 2019, with term bonds in 2029 and 2039. Yields range from 3.65% with a 3.5% coupon in 2013 to 6.30% with a 6.25% coupon in 2039.
The bonds, which are callable at par in 2019, are rated Baa2 by Moody’s and BBB-plus by Fitch.
The economic calendar was light yesterday.