The municipal market was largely unchanged yesterday, as underwriters priced for institutions $1.75 billion of California general obligation debt.
"There some decent follow-through from [Wednesday] early on, but then the market kind of turned around and came to a grinding halt," a trader in Los Angeles said. "It's pretty much been orders only, and no one's really stocking paper now."
"Things are pretty much unchanged," a trader in New York said. "I'm not seeing any dramatic movement in either direction."
The Treasury market showed some losses yesterday. The yield on the benchmark 10-year Treasury note finished at 3.52%, after opening at 3.48%. The yield on the two-year note was quoted near the end of the session at 1.81%, after opening at 1.77%
In the new issue market yesterday, Morgan Stanley priced $1.75 billion of California tax-exempt and taxable GOs, following a two-day retail order period. A total of $898 million, or 51.3%, was sold to retail.
The $1.7 billion tax-exempt component matures in 2009, and from 2011 through 2027, with term bonds in 2029, 2033, and 2038. Yields range from 2.75% with a 4% coupon in 2011 to 4.96% with a 5% coupon in 2038. Bonds maturing in 2009 will be subject to a sealed bid. The bonds are callable at par in 2018.
Yields were selectively lowered at re-pricing. Bonds maturing from 2015 through 2018, in 2033, and in 2038 were priced one basis point lower in yield from the preliminary pricing. All other yields were left untouched.
The deal also contains a $50 million taxable component, which matures from 2009 through 2011. The credit is rated A1 by Moody's Investors Service and A-plus by both Standard & Poor's and Fitch Ratings.
In other activity, Bear, Stearns & Co. priced for retail investors $2 billion of taxable general obligation bonds for Connecticut for the teachers' retirement fund. This is the fourth day of a week-long retail order period, which precedes institutional pricing next week. A $1.6 billion series of current interest bonds matures from 2014 through 2028, with a term bond in 2032. Yields range from 4.20% in 2014 to 5.20% in 2025, all priced at par.
The remaining bonds are not being offered during the retail order period. Additionally, a $400 million series of capital appreciation bonds matures from 2014 through 2025. Only bonds maturing in 2014 and 2018 were offered during the retail order period. The credit is rated Aa3 by Moody's and AA by both Standard & Poor's and Fitch.
Goldman, Sachs & Co. priced $603 million of airport system revenue bonds for Denver in two series, subject to the alternative minimum tax. Bonds from a $213.8 million series mature from 2008 through 2017, with yields ranging from 3.30% with a 5% coupon on 2009 to 4.95% with a 5% coupon in 2017. Bonds maturing in 2008 were decided via sealed bid. Bonds maturing in 2014 are insured by Financial Security Assurance Inc. Bonds from a $389.3 million series mature in 2032, over four different maturities, with yields ranging from 4.05% with a 5% coupon to 4.70% with a 5.25% coupon. FSA insures $200 million of the bonds in this series. The underlying credit is rated A1 by Moody's and A-plus by both Standard & Poor's and Fitch.
Banc of America Securities LLC opened a three-day retail order period on $475 million of GO bonds for New York City, ahead of institutional pricing Tuesday. The bonds mature from 2013 through 2029, with yields ranging from 3.26% with a 4% coupon in 2013 to 4.78% with a 4.75% coupon in 2029. Bonds maturing in 2022, 2023, and from 2025 through 2028 are not being offered during the retail order period. The bonds, which are callable at par in 2018, are rated Aa3 by Moody's, AA by Standard & Poor's, and AA-minus by Fitch.
JPMorgan priced $125 million of revenue bonds for Jacksonville, Fla.-based JEA. The bonds mature in 2013, 2014, 2016, from 2018 through 2028, in 2033, and in 2037. Yields range from 3.25% with a 4% coupon in 2013 to 4.75% with a 5% coupon in 2037. The bonds, which are callable at par in 2013, are rated Aa2 by Moody's and AA-minus by both Standard & Poor's and Fitch.
Merrill Lynch & Co. priced $120.5 million of revenue bonds for the Wisconsin Health and Educational Facilities Authority. The bonds mature from 2008 through 2024, with term bonds in 2027, 2031, 2032, and 2034. Yields range from 2.50% with a 4% coupon in 2008 to 5.08% with a 5% coupon in 2034. Bonds maturing in 2020, 2024, and 2032 were not formally re-offered. The bonds, which are insured by FSA, are callable at par in 2018. The underlying credit is rated A-plus by Standard & Poor's.
Also, Lehman Brothers priced $77.2 million of capital program revenue bonds for the Boston Housing Authority. The bonds mature from 2012 through 2028, with yields ranging from 3.16% with a 5% coupon in 2012 to 4.70% with a 5% coupon in 2028. The bonds, which are callable at par in 2018, are insured by FSA. The underlying credit is rated AA by Standard & Poor's.
In economic data released yesterday, initial jobless claims for the week ended April 5 came in at 357,000, after a revised 410,000 the previous week. Economists polled by IFR Markets had predicted 386,000 initial jobless claims.
Also, continuing jobless claims for the week ended March 29 came in at 2.940 million, after 2.937 million the previous week. Economists polled by IFR Markets had predicted 2.915 million continuing jobless claims.
In economic data slated for release today, March import prices and the preliminary April University of Michigan consumer sentiment index are on the horizon. Economists polled by IFR Markets are predicting a 1.8% climb in import prices, and a 68.0 level in the Michigan sentiment index.
