The municipal market was unchanged to slightly firmer Tuesday, amid light to moderate secondary trading activity.
“It’s been on the firm side,” a trader in Los Angeles said. “The market is probably up one or two basis points. It really has more to do with [people] trying to feel comfortable with the yet newer and higher levels that we are seeing.”
The Los Angeles trader said the business he did see was weighted to high grades.
“People are only going with quality for now,” he said. “On the lesser-quality bonds, a whole lot less interest today.”
A Chicago trader described the market as “very slow” and said the paucity of supply in the primary market was helping to drive down yields.
“There’s not much selling,” the trader said Tuesday. “Any scale change today could be based on some of the trades that would be higher, but overall they would be unchanged, especially with the Treasuries being off.”
The Treasury market showed some losses Tuesday. The benchmark 10-year note was quoted near the end of the session at 3.12%, after opening at 3.06%.
The 30-year bond was quoted near the end of the session at 4.11%, after opening at 4.06%.
The two-year note was quoted near the end of the session at 0.67%, after opening at 0.65%.
The Municipal Market Data triple-A scale yielded 2.66% in 10 years and 3.70% in 20 years Tuesday, matching Monday. The scale yielded 3.99% in 30 years Tuesday, also matching Monday.
Tuesday’s triple-A muni scale in 10 years was at 86.9% of comparable Treasuries and 30-year munis were at 98.5%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 103.9% of the comparable London Interbank Offered Rate.
In the new-issue market Tuesday, JPMorgan priced $187.2 million of electric system revenue bonds for Tacoma, Wash., including $147.0 million of taxable Build America Bonds.
The BABs mature in 2032 and 2035, yielding 5.791%, or 3.76% after the 35% federal subsidy, and 5.966%, or 3.88% after the subsidy, both priced at par.
Bonds maturing in 2032 were insured by Assured Guaranty Municipal Corp. All remaining bonds in the deal are uninsured.
The bonds were priced to yield 170 and 187.5 basis points over the 30-year Treasury yield, and are subject to a make-whole call at Treasuries plus 30 basis points.
Bonds from the $16.0 million series of tax-exempt debt contain split maturities in 2014 and 2015, yielding 1.50% with 2% and 4% coupons in 2014 and 1.85% with 4% and 5% coupons.
Bonds from the $24.2 million series of taxable debt mature in 2027, yielding 5.64% priced at par. The bonds were priced to yield 155 basis points over the 30-year Treasury yield.
The underlying credit is rated Aa3 by Moody’s Investors Service, AA by Standard & Poor’s, and AA-minus by Fitch Ratings.
Morgan Stanley priced $181.1 million of water quality revenue bonds for the Arizona Water Finance Authority in two series.
Bonds from the $138.7 million series mature from 2011 through 2025, with a term bond in 2030. Yields range from 0.58% with a 2% coupon in 2012 to 4.02% with a 5% coupon in 2030. Bonds maturing in 2011 were not formally re-offered. The bonds are callable at par in 2020.
Bonds from the $42.4 million series mature from 2017 through 2020, with yields ranging from 2.25% with a 5% coupon in 2017 to 2.89% with a 5% coupon in 2020. The bonds are not callable.
The credit is rated triple-A by all three major ratings agencies.
Morgan Stanley priced for retail investors $145.8 million of general revenue bonds for the Board of Regents for the Oklahoma Agricultural and Mechanical Colleges.
The bonds mature from 2011 through 2031, with term bonds in 2035 and 2039. Yields range from 0.67% with a 2% coupon in 2012 to 4.53% with a 4.4% coupon in 2039.
The bonds, which are callable at par in 2020, are rated AA-minus by Standard & Poor’s and AA by Fitch.
Morgan Keegan & Co. priced $86.6 million of unlimited tax refunding bonds for Texas’ Mansfield Independent School District.
The bonds mature from 2013 through 2027, with yields ranging from 0.78% with a 4% coupon in 2013 to 3.65% with a 5% coupon in 2027.
The bonds are backed by the state’s Permanent School Fund guarantee program, and are callable at par in 2020. The underlying credit is rated Aa2 by Moody’s, AA by Standard & Poor’s, and AA-plus by Fitch.
Collier County, Fla., competitively sold $59.9 million of special obligation revenue bonds to Barclays Capital, with a true interest cost of 4.27%.
The bonds mature from 2011 through 2030, with a term bond in 2034. Yields range from 1.66% with a 3% coupon in 2014 to 4.61% with a 5% coupon in 2034. Bonds maturing from 2011 through 2013 were not formally re-offered.
The bonds, which are callable at par in 2020, are rated Aa2 by Moody’s and AA by both Standard & Poor’s and Fitch.
New York’s Marlboro Central School District competitively sold $25.1 million of school district serial bonds to Citi, with a TIC of 3.67%.
The bonds mature from 2010 through 2030, with yields ranging from 1.00% with a 4% coupon in 2012 to 3.98% with a 4% coupon in 2029. Bonds maturing in 2010, 2011, and 2030 were not formally re-offered. The bonds, which are callable at par in 2019, are backed by Assured.
The economic calendar was light Tuesday.
Priti Patnaik contributed to this column.