The municipal market was mostly unchanged yesterday, amid Goldman, Sachs & Co.’s pricing of the California Statewide Communities Development Authority’s $1.9 billion revenue bond sale.
“We’re fairly flat out there, but people are focusing on the new issues,” a trader in New York said. “With the Veterans Day holiday Wednesday, this is pretty much the day for new deals this week, so that’s where the attention is going to be. That said, there are some deals getting done out there, and it isn’t terribly quiet in the secondary. But I’m not seeing a whole lot of movement right now.”
“There’s maybe a bit of weakness out long, but I’d call it flat overall,” a trader in Los Angeles said. “I don’t know if it’s enough to move the scale out there. And if so, there’s actually a bit of slight firmness on the shorter end, so you can call it mixed, or just call it flat. Either way, there’s not a whole lot of movement. But decent activity.”
In the new-issue market yesterday, underwriters at Goldman priced the $1.9 billion California SCDA offering for institutions with a single maturity due in 2013, with a yield of 4.00%. The deal follows a two-day retail order period in which $620.5 million was sold to retail investors. The bonds are rated Baa1 by Moody’s Investors Service, A by Standard & Poor’s, and BBB by Fitch Ratings.
The deal accounts for roughly one-third of the week’s $4.31 billion of long-term negotiated volume estimated by Thomson Reuters.
The California Proposition 1A Receivables Program revenue bonds are being issued to securitize the state government’s promise to repay money it is borrowing from local governments to help balance this year’s budget.
Meanwhile, Citi priced $600 million of general obligation notes for Connecticut. Pricing information was not available by press time.
The Treasury market was mixed yesterday. The yield on the benchmark 10-year note opened at 3.46% and was quoted near the end of the session at 3.48%. The yield on the two-year note opened at 0.92% and was quoted near the end of the session at 0.84%. The yield on the 30-year bond was quoted near the end of the session at 4.41% after opening at 4.33%.
Yesterday’s Municipal Market Data triple-A scale yielded 3.00% in 10 years and 3.83% in 20 years after levels of 3.01% and 3.82%, respectively, on Monday. The scale yielded 4.26% in 30 years yesterday after Monday’s level of 4.24%.
As of Monday’s close, the triple-A muni scale in 10 years was at 86.2% of comparable Treasuries, according to MMD, while 30-year munis were 96.1% of comparable Treasuries. Thirty-year tax-exempt triple-A rated general obligation bonds were at 99.5% of the comparable London Interbank Offered Rate at Monday’s close.
Elsewhere in the new-issue market yesterday, the Virginia College Building Authority competitively sold $236.9 million of educational facilities revenue bonds to Bank of America Merrill Lynch with a true interest cost of 4.00%.
The bonds mature from 2010 through 2039, yielding 4.25% priced at par in 2027. The remainder of the bonds were sold but not available.
The bonds, which are callable at par in 2019, are rated Aa1 by Moody’s, AA by Standard & Poor’s, and AA-plus by Fitch.
The Orange County, Calif., Sanitation District competitively sold $165.9 million of revenue refunding certification anticipation notes to Bank of America Merrill with a TIC of 0.38%.
The notes mature in Dec. 2010, with a 2% coupon, and were not formally re-offered. The credit is rated SP-1-plus by Standard & Poor’s and F1-plus by Fitch.
New York’s Triborough Bridge and Tunnel Authority competitively sold $149.2 million of general revenue bond anticipation notes to Jefferies & Co. with a TIC of 0.34%.
The Bans mature in November 2010 with a 2% coupon, but were not formally re-offered.
The credit is rated MIG-1 by Moody’s, SP-1-plus by Standard & Poor’s, and F1 by Fitch.
JPMorgan priced $109.5 million of taxable Build America Bonds for the North Texas Municipal Water District.
The bonds mature from 2015 through 2023, with term bonds in 2029 and 2039. Yields range from 3.18% in 2015, or 2.07% after the 35% federal subsidy, to 6.123% in 2039, or 3.98% after the subsidy, all priced at par. The bonds were priced to yield between 90 and 188 basis points over the comparable Treasury yield.
The bonds are callable at par in 2019, except those maturing from 2015 through 2018, which are subject to a make-whole call at Treasuries plus 25 basis points. The credit is rated Aa2 by Moody’s and AAA by Standard & Poor’s.
Hennepin County, Minn., competitively sold $108.5 million of GO refunding bonds to Piper Jaffray & Co. with a TIC of 2.83%.
The bonds mature from 2010 through 2023, with yields ranging from 1.05% with a 3% coupon in 2012 to 3.36% with a 4% coupon in 2020. Bonds maturing in 2010, 2011, from 2014 through 2016, and from 2021 through 2023 were not formally re-offered.
The bonds, which are callable at par in 2018, are rated triple-A by all three major rating agencies.
Bank of America Merrill Lynch priced $96.3 million of special tax bonds for California’s Irvine Unified School District Community Facilities District No. 86-1.
The bonds mature from 2010 through 2020, with yields ranging from 1.43% with a 3% coupon in 2010 to 4.78% with a 4.5% coupon in 2020.
The bonds, which are called at par in 2019, are insured by Assured Guaranty Municipal Corp. The underlying credit is rated A by Standard & Poor’s.
Barclays Capital priced $95.1 million of lease revenue refunding bonds for the Louisiana Office Facilities Corp.
The bonds mature from 2010 through 2019, with yields ranging from 1.50% with a 2.5% coupon in 2011 to 4.16% with a 5% coupon in 2019. Bonds maturing in 2010 were decided via sealed bid.
The bonds, which are not callable, are rated A2 by Moody’s and A-plus by both Standard & Poor’s and Fitch.
The Bond Buyer one-year note index, which is based on one-year tax-exempt note yields, was unchanged this week at 0.56%.
The economic calendar was light yesterday.