The municipal market was slightly firmer yesterday.
"It's firm, but quiet," a trader in New York said. "Not as quiet as [Monday], but still quiet. Trades are taking place at aggressive levels, though, and we're probably up a basis point or two."
"I think the market has a pretty good tone," a trader in Chicago added. "It's quiet and the secondary market is a bit spotty, but ratios are still good and bringing people into the market."
The Treasury market was mixed yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.91%, finished at 3.89%. The yield on the two-year note was quoted near the end of the session at 2.45%, after opening at 2.43%.
"We saw quite a bit of firmness on the very short end, but overall, we're better about two or three basis points," a trader in Los Angeles said. "There wasn't a whole lot of activity, but the tone was unquestionably firmer."
In economic data released yesterday, merchant wholesalers posted a 0.8% increase in inventories in May, while sales jumped 1.6% in the month. Inventories of merchant wholesalers grew to $431.0 billion, following an upwardly revised 1.4% increase to $427.6 billion in April.
Meanwhile, sales of merchant wholesalers rose to about $397.4 billion, following April's revised 1.6% increase to $391.1 billion. Economists polled by IFR Markets predicted a 0.7% increase in wholesale inventories, and 0.7% growth in wholesale sales.
Later this week, a slate of economic data will be released. Tomorrow, initial jobless claims for the week ended July 5 will be released, along with continuing jobless claims for the week ended June 28. And Friday, the preliminary University of Michigan consumer sentiment index for July is due.
Economists polled by IFR are predicting 399,000 initial jobless claims, 3.125 million continuing jobless claims, and a 56.0 Michigan sentiment index.
In the new-issue market yesterday, Los Angeles competitively sold $977.6 million of tax and revenue anticipation notes to various bidders. Citi won the largest chunk of the deal, $412.6 million, with a true interest cost of 1.56%. JPMorgan grabbed a $200 million piece with a TIC of 1.55%, Goldman, Sachs & Co. brought home $140 million with a TIC of 1.546% and $20 million with a TIC of 1.547%, Lehman Brothers won $70 million with a TIC of 1.549%, Citi grabbed a second $50 million component with a TIC of 1.548%, Banc of America Securities LLC won $50 million with a TIC of 1.55% and $25 million with a TIC of 1.553%, and Zions First National Bank grabbed a $10 million chunk with a TIC of 1.555%.
The notes are rated MIG-1 by Moody's Investors Service, SP-1-plus by Standard & Poor's, and F1-plus by Fitch Ratings.
Elsewhere in the state, Sacramento County sold $440 million of Trans in the competitive market yesterday to various bidders. JPMorgan won the largest piece, worth $415 million, with a net interest cost of 1.61%. The notes are rated MIG-1 by Moody's and SP-1-plus by Standard & Poor's.
Harris County, Tex., competitively sold $395 million of tax anticipation notes to various bidders. Goldman Sachs took the largest chunk, $375 million, with a TIC of 1.57%. The notes yield 3.00%, priced at par. The notes are rated SP-1-plus by Standard & Poor's and F1-plus by Fitch.
The Florida State Board of Education competitively sold $200 million of public education capital outlay bonds to Merrill Lynch & Co., with a TIC of 4.65%. The bonds mature from 2009 through 2030, with term bonds in 2035 and 2038. Yields range from 3.70% with a 5% coupon in 2016 to 4.61% with a 5% coupon in 2029. Bonds maturing from 2009 through 2015, from 2018 through 2020, and in 2026, 2027, 2030, 2035, and 2038 were not formally re-offered. The bonds, which are callable at 101 in 2018, declining to par in 2019, are rated Aa1 by Moody's, AAA by Standard & Poor's, and AA-plus by Fitch.
JPMorgan priced $118.9 million of subordinate-lien revenue bonds for California's MSR Public Power Agency. The bonds mature from 2009 through 2022, with yields ranging from 1.75% with a 4% coupon in 2009 to 4.34% with a 5% coupon in 2022. The bonds, which are callable at par in 2018, are insured by Financial Security Assurance Inc. The underlying credit is rated A by Standard & Poor's and A-plus by Fitch.
Citi priced $115 million of Fordham University revenue bonds for the Dormitory Authority of the State of New York. The bonds mature from 2009 through 2028, with term bonds in 2033 and 2038. Yields range from 2.57% with a 3% coupon in 2010 to 4.78% with a 5% coupon in 2038. The bonds, which are callable at par in 2018, are insured by Assured Guaranty Corp. The underlying credit is rated A2 by Moody's.
The University of Louisville competitively sold $88 million of general receipts bonds to BB&T Capital Markets, with a NIC of 4.37%. The bonds mature from 2009 through 2028, with yields ranging from 1.90% with a 4% coupon in 2009 to 4.29% with a 4.5% coupon in 2022. Bonds maturing from 2010 through 2015, in 2019, and from 2023 through 2028 were not formally re-offered. The bonds, which are callable at par in 2018, are rated Aa3 by Moody's and AA-minus by Standard & Poor's.