The municipal market was unchanged with a slightly weaker tone yesterday amid fairly light trading activity.
"There's a little bit of activity out in the secondary, but not a ton," said a trader in New York. "But people who want to get something done can get it done. We've got a bit of a weaker tone, though we're probably unchanged on the whole. We're maybe cheapening up a basis point or so here and there, but overall, I'd say we're fairly flat."
"There's some weakness out there, but there's not a whole lot going on," a trader in Los Angeles said. "It's maybe a basis point or two weaker in spots, but there isn't too much movement."
The Treasury market was mixed yesterday. The yield on the benchmark 10-year note opened at 3.55% and was also quoted near the end of the session at 3.55%. The yield on the two-year note opened at 0.80% and was quoted near the end of the session at 0.86%. The yield on the 30-year bond was quoted near the end of the session at 4.48% after opening at 4.50%.
Yesterday's Municipal Market Data triple-A scale yielded 2.86% in 10 years and 3.63% in 20 years, after levels of 2.86% and 3.63% on Friday. The scale yielded 4.12% in 30 years yesterday after Friday's level of 4.12%.
As of Friday's close, the triple-A muni scale in 10 years was at 80.8% of comparable Treasuries, according to MMD, while 30-year munis were 91.4% of comparable Treasuries, while 30-year tax-exempt triple-A rated general obligation bonds were at 96.3% of the comparable London Interbank Offered Rate.
Two large note deals and a handful of long-term financings will come to market this week as part of an estimated $4.69 billion in new volume, according to Ipreo LLC and The Bond Buyer.
Last week, volume was $9.64 billion, according to Thomson Reuters, augmented by three large Northeast offerings of taxable Build America Bonds, which were sold Thursday and topped over $1.6 billion.
In what will be the last full week of market activity for the year, Pennsylvania is planning to issue $800 million of tax anticipation notes, while Suffolk County, N.Y., is also readying a $350 million Tan sale. Both of the note sales will take place in the competitive market today.
Slated to mature on June 30, 2010, the Pennsylvania notes are secured by pledged general revenues. They will be used to provide disbursements, payrolls, and other operating costs during the current fiscal year in order to cover cash shortfalls prior to the state receiving the bulk of its general fund revenues during the last four months of the current fiscal year from March through June. The Pennsylvania notes are rated MIG-1 by Moody's Investors Service and SP-1-plus by Standard & Poor's, and F1-plus by Fitch Ratings.
The Suffolk County notes, which mature on Aug. 12, 2010, are being sold in expectation of the county collecting $672 million in real property taxes and assessments for the fiscal 2010 operations. They are rated MIG-1 by Moody's, SP1-plus by Standard & Poor's, and F1-plus by Fitch.
Meanwhile, in the long-term market also hailing from the Northeast region this week, is a $500 million sale of revenue bonds backed by payments in lieu of taxes from the Brooklyn Arena Local Development Corp., a subsidiary of the Empire State Development Corp.
Scheduled to be priced tomorrow by Goldman, Sachs & Co., the sale is expected to be rated Baa3 by Moody's and BBB-minus by Standard & Poor's and the proceeds will finance the Barclays Center Project..
Nearby, Connecticut will come to market with $450 million of GOs being issued as taxable BABs. Expected to be priced by Morgan Stanley today, the deal is structured with term maturities between 2020 and 2023, and in 2029, and is rated Aa3 by Moody's, AA by Standard & Poor's, and AA by Fitch.
In the new-issue market yesterday, Wells Fargo Securities priced $27 million of certificates of participation for the Lee County, Fla., School Board.
The bonds mature from 2011 through 2013, yielding 1.80% with a 5% coupon in 2012 and 2.17% with a 4% coupon in 2013. Bonds maturing in 2010 were not formally re-offered.
The bonds, which are not callable, are rated A1 by Moody's and A-plus by Standard & Poor's.
In addition, Raymond James & Co. priced $15 million of governmental pooled loan revenue bonds for the Monmouth County, N.J., Improvement Authority.
The bonds mature from 2010 through 2024, with term bonds in 2026 and 2029. Yields range from 0.60% with a 2.5% coupon in 2010 to 3.88% with a 5% coupon in 2029.
The bonds, which are callable at par in 2019, are rated triple-A by all three major ratings agencies.
RBC Capital Markets priced $13.2 million of unlimited-tax refunding bonds for Texas' Sienna Plantation Levee Improvement District.
The bonds mature from 2010 through 2027, with yields ranging from 1.00% with a 3% coupon in 2010 to 4.80% with a 4.7% coupon in 2027.
The bonds, which are callable at par in 2017, are insured by Assured Guaranty Corp. The underlying credit is rated BBB-plus by Standard & Poor's.
Trades reported by the Municipal Securities Rulemaking Board yesterday showed some losses. Bonds from an interdealer trade of taxable Port Authority of New York and New Jersey 5.859s of 2024 at 5.17%, up two basis points from where they traded Friday. Bonds from an interdealer trade of California 5.5s of 2039 yielded 5.86%, even with where they were sold Friday.
A dealer sold to a customer taxable Nassau County, N.Y., BABs 6.05s of 2028 at 6.10%, up one basis point from where they were sold Friday. A dealer sold to a customer insured Los Angeles Unified School District 4.5s of 2028 at 4.73%, even with where they were traded Friday.
Bonds from an interdealer trade of New York State 4.5s of 2030 yielded 4.50%, even with where they were traded Friday. A dealer sold to a customer New Jersey 4s of 2029 at 4.11%, even with where they were sold Friday. Bonds from an interdealer trade of taxable Las Vegas BABs 7.8s of 2039 yielded 7.83%, even with where they were sold Friday.
The economic calendar was light yesterday.