The municipal market was slightly firmer yesterday. Traders said tax-exempt yields were lower by one or two basis points overall.
“There’s some decent activity out in the secondary,” a trader in New York said. “The tone is still pretty firm, and you can maybe pick up a basis point or so here and there. I’m not sure that’s the case for the whole curve, but I’d say we’re a little bit better.”
“There is some firmness out there,” a trader in Los Angeles said. “We’re probably a good basis point or two better overall, but it’s even three or four basis points better in spots, depending on what you’re trading.”
In the new-issue market yesterday, the Virginia College Building Authority competitively sold $390 million of taxable Build America educational facilities revenue bonds to JPMorgan at a true interest cost of 5.08%.
The bonds mature from 2015 through 2030, with yields ranging from 3.65% with a 3.875% coupon in 2017, or 2.52% after the 35% federal subsidy, to 5.68% with a 5.75% coupon in 2030, or 3.69% after the subsidy. Bonds maturing in 2015 and 2016 were not formally re-offered. The bonds were priced to yield between 90 and 190 basis points over the comparable Treasury yields.
The bonds, which are callable at par in 2020, are rated Aa1 by Moody’s Investors Service and AA-plus by Standard & Poor’s and Fitch Ratings.
The Treasury market mostly showed losses yesterday. The yield on the benchmark 10-year note opened at 3.28% and was quoted near the end of the session at 3.32%. The yield on the two-year note opened at 0.67% and was quoted near the end of the session at 0.72%. The yield on the 30-year bond was quoted near the end of the session at 4.26% after opening at 4.27%.
Yesterday’s Municipal Market Data triple-A scale yielded 2.73% in 10 years and 3.66% in 20 years, following levels of 2.78% and 3.73%, respectively, Tuesday. The scale yielded 4.20% in 30 years yesterday, after Tuesday’s level of 4.25%.
Elsewhere in the new-issue market yesterday, Morgan Stanley priced $210.8 million of public improvement refunding bonds for Puerto Rico.
The bonds mature in 2039, yielding 6.20% with a 6% coupon.
The bonds, which are callable at par in 2019, are rated Baa3 by Moody’s and BBB-minus by Standard & Poor’s.
The Florida State Board of Education competitively sold $140.1 million of taxable BABs to Wells Fargo Securities, with a true interest cost of 5.69%.
The bonds mature from 2015 through 2024, with term bonds in 2029 and 2039. Yields range from 4.89% with a 4.8% coupon in 2022, or 3.12% after the 35% federal subsidy, to 5.90% with a 5.8% coupon in 2039, or 3.77% after the subsidy.
Bonds maturing from 2015 through 2021 were not formally re-offered. The bonds were priced to yield between 160 and 180 basis points over the comparable Treasury yields.
The bonds, which are callable at par in 2019, are rated Aa1 by Moody’s, AAA by Standard & Poor’s, and AA-plus by Fitch.
JPMorgan priced $129.2 million of general airport revenue bonds for Oklahoma’s Tulsa Airports Improvement Trust in multiple series.
Bonds from the $42.7 million Series A mature from 2010 through 2019, with a term bond in 2024. Yields range from 1.80% with a 3% coupon in 2010 to 5.56% with a 5.375% coupon in 2024. The bonds are callable at par in 2015.
Bonds from the $26.0 million Series B mature from 2011 through 2019, with term bonds in 2024 and 2031. Yields range from 2.21% with a 3% coupon in 2011 to 5.83% with a 5.75% coupon in 2031. The bonds are callable at par in 2015.
Bonds from the $4 million Series C, which is subject to the alternative minimum tax, mature from 2010 through 2019, with a term bond in 2023.
Yields range from 2.55% with a 3% coupon in 2010 to 6.23% with a 6% coupon in 2023. The bonds are callable at par in 2015.
Bonds from the $56.5 million taxable Series D mature from 2010 through 2019, with term bonds in 2024 and 2031. The bonds were priced to yield between 200 and 380 basis points over the comparable Treasury yield. The bonds are callable at par in 2019.
The credit is rated A3 by Moody’s and BBB-plus by Standard & Poor’s.
Piper Jaffray & Co. priced $105 million of bonds for California’s Corona-Norco Unified School District in multiple series.
Bonds from a $32 million series of taxable BABs mature in 2035, yielding 7.343% priced at par, or 4.77% after the 35% federal subsidy.
The bonds were priced to yield 310 basis points over the comparable Treasury yield. These bonds are callable at par in 2019.
Bonds from a $28.4 million series of current interest bonds mature in 2039, yielding 5.50% priced at par, and are callable at par in 2019.
Bonds from a $27.2 million series of capital appreciation bonds mature from 2012 through 2026, with term bonds in 2032 and 2039, with yields to maturity ranging from 2.50% in 2012 to 7.08% in 2039.
Bonds from a $17.7 million series of CABs mature in 2029 and 2039, with yields to maturity of 6.20% and 6.80%, respectively. They are callable at par in 2027.
The bonds, which are insured by Assured Guaranty Corp., have underlying ratings of A1 from Moody’s and A-plus from Standard & Poor’s.
Bank of America Merrill Lynch priced $75 million of hospital revenue bonds for Virginia’s Winchester Industrial Development Authority.
The bonds mature from 2015 through 2019, with term bonds in 2024, 2029, 2034, 2039, and 2044. Yields range from 3.45% with a 3.5% coupon in 2015 to 5.75% with a 5.625% coupon in 2044.
The bonds are callable at par in 2015, except for 5.625% coupon bonds maturing in 2044, which are callable at par in 2019. The credit is rated A1 by Moody’s and A-plus by Standard & Poor’s.
The Bond Buyer’s one-year note index, which is based on one-year tax-exempt note yields, reached an all-time low this week of 0.52%. The index began in July 1989.
The economic calendar was light yesterday.
