The municipal market was unchanged with a slightly weaker tone yesterday.
"There might be a very small amount of weakness out there, with Treasuries down, but there's not a whole lot of movement," a trader in Los Angeles said. "I'd say a basis point or two in spots, if anything."
"It's a bit of a slow start today," a trader in New York said. "Bonds cheapened up pretty substantially last week, which followed a few weeks of bonds getting more expensive, but there's really no decided direction at this point today. We're pretty flat, at least for now."
The Treasury market showed losses yesterday. The yield on the benchmark 10-year Treasury note, which opened at 2.59%, finished at 2.65%. The yield on the two-year note was quoted near the end of the session at 0.84%,after opening at 0.81%. The yield on the 30-year bond, which opened at 3.33%, was quoted near the end of the session at 3.38%.
As January comes to a close, a pair of New York deals - one to finance a new baseball stadium - and a utility offering in the nation's capital are expected to be the largest deals priced this week in conjunction with an estimated $2.975 billion in new competitive and negotiated volume, according to Thomson Reuters.
The District of Columbia Water and Sewer Authority's $300 million public utility senior-lien revenue bond offering is the largest long-term deal on the negotiated calendar published by Ipreo.
The Water and Sewer Authority bonds are rated Aa3 by Moody's Investors Service, AA by Standard & Poor's, and AA-minus by Fitch Ratings. Morgan Stanley is slated to price the sale for retail today, followed by institutional pricing tomorrow, with a structure that includes serial bonds maturing from 2010 to 2018 with term bonds in 2023, 2028, and 2039, according to the preliminary official statement.
Meanwhile, the New York City Industrial Development Agency will sell $259 million of revenue bonds today when Goldman, Sachs & Co. prices the offering to help finance the new Yankee Stadium project. Bonds will be insured by Assured Guaranty Corp. and will have underlying ratings of Baa3 from Moody's and BBB-minus from Standard & Poor's.
In the new-issue market, JPMorgan priced for retail investors $150 million of revenue bonds for the Los Angeles Department of Water & Power. The bonds mature from 2016 through 2031, with term bonds in 2034 and 2038. Yields range from 2.74% with a 5% coupon in 2016 to 5.45% with a 5.375% coupon in 2034. Bonds maturing in 2038 were not offered during the retail order period. The bonds, which are callable at par in 2019, are rated Aa3 by Moody's and AA by Standard & Poor's and Fitch.
RBC Capital Markets priced $137.7 million of unlimited-tax school building bonds for Texas' Round Rock Independent School District. The bonds mature in 2010 and from 2012 through 2030, with a term bond in 2034. Yields range from 1.15% with a 4% coupon in 2010 to 5.48% with a 5.25% coupon in 2034. The bonds, which are callable at par in 2018, are rated Aa1 by Moody's and AA by Standard & Poor's.
Morgan Stanley priced for retail investors $111.9 million of revenue bonds for the Illinois Finance Authority on behalf of Rush University Medical Center in two series. Bonds from the $77.6 million Series A mature from 2013 through 2020, with term bonds in 2024 and 2030. Yields range from 4.65% with a 5% coupon in 2013 to 7.45% with a 7.375% coupon in 2030. The bonds are callable at par in 2018. Bonds from the $34.3 million Series B mature in 2030 and 2038, yielding 7.45% with a 7.375% coupon and 7.625% priced at par, respectively. Those bonds are not callable. The credit is rated A3 by Moody's and A-minus by Standard & Poor's and Fitch.
Barclays Capital priced for retail $250 million of Triborough Bridge and Tunnel Authority Series 2009A-2 bonds ahead of institutional pricing today.
In economic data released yesterday, existing home sales increased 6.5% in December to a seasonally adjusted 4.74 million-unit rate. The sales gain to 4.74 million contrasted a drop to a 4.40 million unit pace predicted by Thomson Reuters' poll of economists and followed a revised 9.4% drop to a 4.45 million unit level in November.
The composite index of leading economic indicators rose 0.3% in December to 99.5 after decreasing an unrevised 0.4% in November. Economists polled by Thomson predicted LEI would be off 0.3% in the month.
A slate of additional economic data will be released later this week. Today, the January consumer confidence index will be released, followed Thursday by initial jobless claims for the week ended Jan. 24, continuing jobless claims for the week ended Jan. 17, the December durable goods report, and December new home sales. On Friday, the advanced fourth-quarter gross domestic product report is scheduled for release, along with the January Chicago purchasing managers index and the final January University of Michigan consumer sentiment index.
Economists polled by Thomson Reuters are predicting a 39.0 consumer confidence index, 575,000 initial jobless claims, 4.650 million continuing jobless claims, a 2.0% decline in durable goods, a 2.7% dip in durable goods excluding transportation, 400,000 new home sales, a 5.4% drop in GDP, a 34.0 Chicago PMI reading, and a 61.9 Michigan sentiment index.