The municipal market was unchanged to slightly firmer yesterday amid light to moderate secondary trading activity.
“It’s more of the same that we’ve seen all week so far,” a veteran trader in New York said. “There’s not an abundance of activity, and it’s somewhat flat, though there is definitely a firmer tone, and you can probably pick up a couple of basis points here and there, depending on what you’re trading.”
A Los Angeles trader said there is still decent interest in the marketplace, despite the light trading.
“It seems geared towards perhaps the shorter end of the market curve, 10 years on in,” a trader in Los Angeles said. “But, it does seem like we are already getting into the vacation mode with the weekend pending. It has been a little quieter with lighter volumes than we’ve seen the past few days.”
The Treasury market was somewhat mixed yesterday, with gains on the long end. The benchmark 10-year note finished at 2.94% after opening at 2.95%. The 30-year bond was quoted near the end of the session at 3.90% after opening at 3.94%. The two-year note finished at 0.61% after opening at 0.60%.
The Municipal Market Data triple-A scale yielded 2.79% in 10 years and 3.75% in 20 years yesterday, following levels of 2.81% and 3.76% Tuesday. The scale yielded 4.02% in 30 years yesterday, matching 4.04% Tuesday.
Tuesday’s triple-A muni scale in 10 years was at 94.1% of comparable Treasuries and 30-year munis were at 101.0%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 106.0% of the comparable London Interbank Offered Rate.
In the new-issue market yesterday, Bank of America Merrill Lynch competitively sold $650 million of second priority Liberty revenue refunding bonds for the New York Liberty Development Corp., in three series.
Bonds from the $351.6 million Series 2010, Class 1 mature in 2044 and 2046, yielding 5.25% with a 5.125% coupon and 5.25% with a 5.625% coupon. The bonds are callable at par in 2020 and are rated AA by both Standard & Poor’s and Fitch Ratings.
Bonds from the $87.1 million Series 2010, Class 2 mature in 2047, yielding 5.625% priced at par. The bonds are callable at par in 2020 and are rated A by both Standard & Poor’s and Fitch.
Bonds from the $211.3 million Series 2010, Class 3 mature in 2049, yielding 6.375% priced at par. The bonds are callable at par in 2020 and are rated BBB-minus by both Standard & Poor’s and Fitch.
Citi priced $347.9 million of health system revenue bonds for Pennsylvania’s Chester County Health and Education Facilities Authority in two series.
Bonds from the $164.5 million Series A mature from 2011 through 2023, with term bonds in 2030, 2031, and 2040.
Bonds from the $183.4 million Series B mature from 2011 through 2023, with term bonds in 2030 and 2040.
Pricing information on the deal was not available by press time.
The credit is rated Aa3 by Moody’s Investors Service and AA by Standard & Poor’s and Fitch.
JPMorgan priced $45.8 million of affordable housing revenue bonds for the New York State Housing Finance Agency.
The bonds mature from 2010 through 2022, with term bonds in 2025, 2030, 2036, and 2042. Yields range from 0.50% in 2010 to 5.00% in 2042, all priced at par.
The bonds are callable at par in 2020, except bonds maturing in 2012, which are callable at par in 2011, and bonds maturing in 2013, which are callable at par in 2012.
The credit is rated Aa2 by Moody’s.
Citi priced $37.1 million of refunding certificates of participation for Florida’s Bay County School Board.
The debt matures from 2011 through 2023, with yields ranging from 2.06% with a 3% coupon in 2013 to 4.50% with a 4.375% coupon in 2023.
Debt maturing in 2011 and 2012 in uninsured; all other debt is insured by Assured Guaranty Corp.
The underlying credit is rated Aa3 by Moody’s.
Meriden, Conn., competitively sold $22.3 million of taxable general obligation Build America Bonds to Robert W. Baird & Co. with a true interest cost of 3.07%.
The bonds mature from 2011 through 2030, with coupons ranging from 1.00% in 2011, or 0.65% after the 35% federal subsidy, to 5.75% in 2030, or 3.74% post-subsidy.
None of the bonds were formally re-offered.
The bonds, which are callable at par in 2018, are rated AA-minus by Standard & Poor’s.
“There does not seem to be any huge upticks or downticks but there is still money selectively being put to work,” a trader in Los Angeles said. “Things are getting a little richer. Retail investors are getting more resistant to that.”
In economic data released yesterday, the Chicago Purchasing Managers’ Business Barometer fell to 59.1 in June from 59.7 in May.
The data is compiled on a seasonally adjusted basis. An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.
Economists polled by Thomson Reuters predicted a 58.5 reading for the indicator.
Priti Patnaik contributed to this column.