The municipal market was unchanged to slightly firmer yesterday as the Puerto Rico Electric Power Authority came to market with an upsized $643 million sale.
“There’s maybe a little bit of firmness out there, but it’s spotty,” a trader in New York said. “Overall, I’d probably call it unchanged, maybe one basis point better depending on what you’re trading. But you could pick up as many as two or three basis points, depending on the credit and where on the curve you’re talking.”
“We might be better two or three basis points, more on the long end of the curve,” a trader in Los Angeles said. “Inside of 10 or so years, though, we’re pretty much flat. There was some decent activity, but it’s not overly active on the Street. Most people had their eyes on the new issues it seemed.”
In the new-issue market yesterday, Morgan Stanley priced $643.1 million of power revenue refunding bonds for the Puerto Rico Electric Power Authority, increased from the originally planned $275 million.
The bonds mature from 2011 through 2028, with yields ranging from 1.00% with a 2% coupon in 2011 to 4.91% with a 5% coupon in 2028. The bonds are callable at par in 2020, except bonds maturing in 2026, 2027, and 2028, which are callable at par in 2015.
The credit is rated A3 by Moody’s Investors Service and BBB-plus by both Standard & Poor’s and Fitch Ratings.
Bank of America Merrill Lynch priced for retail investors $723 million of school facilities construction bonds for the New Jersey Economic Development Authority in two series. Yields in the deal range from 2.77% in 2015 to 4.56% in 2031. Bonds maturing in 2032 were not formally re-offered.
The bonds, which are callable at par in 2020, are rated Aa3 by Moody’s and AA-minus by both Standard & Poor’s and Fitch.
The Treasury market was somewhat mixed yesterday. The benchmark 10-year note was quoted near the end of the session with a yield of 3.76% after opening at 3.80%. The yield on the two-year was quoted near the end of the session at 1.02% after opening at 1.01%. The yield on the 30-year bond was quoted near the end of the session at 4.63%,after opening at 4.67%.
The Municipal Market Data triple-A scale yielded 2.98% in 10 years and 3.82% in 20 years yesterday, compared with Tuesday’s levels of 3.01% and 3.84%. The scale yielded 4.11% in 30 years yesterday, matching Tuesday.
Yesterday’s triple-A muni scale in 10 years was at 79.2% of comparable Treasuries and 30-year munis were at 88.7%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 92.6% of the comparable London Interbank Offered Rate.
Elsewhere in the new-issue market, the Florida Department of Environmental Protection competitively sold $233 million of Florida Forever revenue bonds to JPMorgan, with a true interest cost of 1.17%.
The bonds mature from 2011 through 2013, yielding 1.00% with a 5.25% coupon in 2012 and 1.34% with a 5% coupon in 2013. Bonds maturing in 2011 were not formally re-offered.
The bonds, which are not callable, are rated Aa3 by Moody’s, AA-minus by Standard & Poor’s, and A by Fitch.
Barclays Capital priced $185.5 million of water financial assistance GOs for Texas in two series.
Bonds from the $143.2 million series mature from 2011 through 2030, with yields ranging from 0.47% with a 5% coupon in 2011 to 4.07% with a 5% coupon in 2030. The bonds are callable at par in 2019.
Bonds from the $42.3 million series mature from 2010 through 2030, with yields ranging from 0.47% with a 5% coupon in 2011 to 4.07% with a 5% coupon in 2030. Bonds maturing in 2010 were decided via sealed bid. The bonds are callable at par in 2019.
The credit is rated Aaa by Moody’s, AA-plus by Standard & Poor’s, and AAA by Fitch.
Citi priced $151 million of health care revenue bonds for the Missouri Health and Educational Facilities Authority.
The bonds mature from 2018 through 2022, with term bonds in 2025, 2030, and 2034. Yields range from 3.71% with a 5% coupon in 2018 to 4.90% with a 5% coupon in 2034, and are callable at par in 2020, except bonds maturing in 2030, which are callable at par in 2015.
The credit is rated AA-minus by both Standard & Poor’s and Fitch.
Citi also priced $121 million of SSM Health Care revenue bonds for the Wisconsin Health and Educational Facilities Authority.
The bonds mature from 2011 through 2022, with term bonds in 2025, 2030, and 2034. Yields range from 0.80% with a 2% coupon in 2011 to 4.90% with a 5.25% coupon in 2034. The bonds are callable at par in 2020, except bonds maturing in 2030, which are callable at par in 2015.
The credit is rated AA-minus by both Standard & Poor’s and Fitch.
Trades reported by the Municipal Securities Rulemaking Board yesterday showed some gains. A dealer sold to a customer Tennessee 4.5s of 2024 at 3.15%, down two basis points from where they were sold Tuesday. Bonds from an interdealer trade of California 4.5s of 2027 yielded 5.17%, down three basis points from where they were sold Tuesday.
A dealer sold to a customer Anchorage 4.5s of 2023 at 3.75%, even with where they were sold Tuesday. A dealer sold to a customer taxable New York Build America Bonds 4.54s of 2022 at 4.70%, even with where they were sold Tuesday.
A dealer sold to a customer Illinois Finance Authority 5.5s of 2030 at 6.16%, down one basis point from where they were sold Tuesday. A dealer sold to a customer University of Texas 5.25s of 2035 at 4.40%, even with where they were sold Tuesday.
A dealer sold to a customer insured Pennsylvania Turnpike Commission 5s of 2038 at 4.76%, down one basis point from where they were sold Tuesday. A dealer bought from a customer New York City Municipal Water Finance Authority 4.5s of 2039 at 4.58%, even with where they were sold Tuesday.
The economic calendar was light yesterday.
