The municipal market was mostly unchanged Friday amid a rare large Friday issuance being priced in the primary market.
In the new-issue market Friday, Goldman, Sachs & Co. priced $1.01 billion of taxable Project M Build America Bonds for the Municipal Electric Authority of Georgia.
The bonds mature in 2057, yielding 6.66%, or 4.33% after the 35% federal subsidy. The bonds were priced to yield 200 basis points over the comparable Treasury yield, and contain a make-whole call at Treasuries plus 35 basis points.
This follows Wednesday’s pricing of $1.2 billion of Project J taxable BABs. The bonds mature in 2057, yielding 6.637%, or 4.31% after the 35% federal subsidy. The bonds were priced to yield 205 basis points over the comparable Treasury yield, and contain a make-whole call at Treasuries plus 35 basis points.
The MEAG deal also includes Project P bonds that total $419.1 million, and will price at a later date.
They are structured as $410.8 million of taxable BABs in Series 2010A to mature from 2018 to 2057, and $8.24 million of tax-exempts in Series 2010B maturing from 2017 to 2020 and in 2040.
The Project J and M bonds are rated A2 by Moody’s Investors Service and A-plus by Standard & Poor’s and Fitch Ratings. The Project P bonds are rated Baa2 by Moody’s and A-minus by Standard & Poor’s and Fitch.
Proceeds from the billion-dollar sale will be used to finance the construction of new projects, including MEAG’s share of two new nuclear units at its Plant
Vogtle facility.
Traders said tax-exempt yields in the secondary market Friday were mostly flat.
“There’s not a whole lot trading at this point,” a trader in New York said. “We’re just pretty unchanged right now. I mean, if you’re really compelled to get something done, you can, but there’s just not a lot going on.”
“There might be a slightly weaker tone, but we’re largely flat,” a trader in Los Angeles said. “I’d say unchanged overall, but maybe we’re down a basis point here and there depending on what you’re trading.”
The Treasury market showed losses Friday. The benchmark 10-year note was quoted near the end of the session with a yield of 3.68% after opening at 3.61%. The yield on the two-year was quoted near the end of the session at 0.89% after opening at 0.85%.
The yield on the 30-year bond was quoted near the end of the session at 4.64% after opening at 4.56%.
The Municipal Market Data triple-A scale yielded 2.81% in 10 years and 3.79% in 20 years Friday, following Thursday’s levels of 2.80% and 3.78%, respectively. The scale yielded 4.15% in 30 years Friday, following 4.14% yesterday.
Thursday’s triple-A muni scale in 10 years was at 77.8% of comparable Treasuries and 30-year munis were at 90.8%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 95.4% of the comparable London Interbank Offered Rate.
In economic data released Friday, nonfarm payrolls dropped 36,000 in February, followed a 20,000 decline the previous month. Economists polled by Thomson Reuters had predicted that 50,000 jobs were lost in February.
The unemployment rate remained at 9.7% in February, matching its January level. Economists polled by Thomson Reuters had predicted the unemployment rate would be 9.8%.
