The municipal market was unchanged yesterday as several $100 million-plus issues were brought to market.
"I think we're pretty unchanged," a trader in Chicago said. "The dynamic in the market is a lot of money in the market due to redemptions, and there's a lot of supply out there, too. Demand seems to be motoring in the market, but supply seems to be meeting it."
Trades reported by the Municipal Securities Rulemaking Board yesterday showed little movement. Bonds from an interdealer trade of insured University of California 4.5s of 2035 yielded 4.73%, unchanged from Monday. Bonds from an interdealer trade of New York City Municipal Water Finance Authority 4.625s of 2031 traded at 4.7%, unchanged from where they were sold to a customer Monday. A dealer sold to a customer insured Louisiana 4.75s of 2039 at 4.75%, even with where they traded Monday.
The Treasury market showed gains yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.96%, finished at 3.91%. The yield on the two-year note was quoted near the end of the session at 2.44%, after opening at 2.51%.
In the new-issue market yesterday, Banc of America Securities LLC priced for retail investors $600 million of aviation revenue bonds for Miami-Dade County for the benefit of Miami International Airport.
Bonds from the $435 million Series A, which is subject to the alternative minimum tax, mature from 2024 through 2027, with term bonds in 2033, 2038, and 2041. None of these bonds, except for a $4.7 million term bond in 2038, were offered to investors during the retail order period.
Bonds from the $165 million Series B, which is not subject to the AMT, mature from 2016 through 2023, with term bonds in 2028, 2038 and 2041. Yields range from 3.92% with a 4% coupon in 2016 to 5% priced at par in 2028 and 2038. Bonds maturing in 2041 were not offered to investors during the retail order period.
All bonds are insured by Assured Guaranty Corp., except for a Series A term bond maturing in 2038, the 2041 Series A term bond, and the 2038 and 2041 term bonds in Series B, which are insured by Financial Security Assurance Inc. The bonds from both series, which are callable in 2018, have underlying credit ratings of A2 from Moody's Investors Service, A-minus from Standard & Poor's and A from Fitch Ratings.
Elsewhere in the new-issue market, JPMorgan priced $333.7 million of revenue bonds for the Massachusetts Health and Educational Facilities Authority for the benefit of Harvard University in two series. Bonds from the $208.7 million Series B mature in 2038, yielding 4.49% with a 5% coupon. The bonds, which are callable at par in 2017, are rated AAA by Moody's and Standard & Poor's. The offering also includes the $125 million taxable series C.
JPMorgan also priced for retail investors $265.1 million in certificates of participation for the Broward County, Fla., School Board. The bonds mature 2012 through 2028, with a term bond in 2033. Yields range from 3.18% on a 3.15% coupon in 2012 to 4.81% on a 4.75% coupon in 2033. Bonds from 2020 through 2022 and 2024 through 2027 were not offered to retail investors. The bonds, which are callable at par in 2018, are insured by FSA, and have an underlying credit rating of A1 from Moody's and A-plus from Standard & Poor's and Fitch.
Merrill Lynch & Co. priced $175 million of hospital revenue bonds for Pennsylvania's Northampton County General Purpose Authority for the benefit of the St. Luke's Hospital Project. Bonds mature from 2019 through 2024, with term bonds in 2028, 2035 and 2040. Yields range from 5.01% with a 5% coupon in 2019 to 5.66% with a 5.5% coupon in 2040. The bonds, which are callable at par in 2018, are rated Baa1 by Moody's and BBB-plus by Standard & Poor's.
Arlington County, Va., competitively sold $111 million of general obligation public improvement bonds to Davenport & Co. with a true interest cost of 4.04%. Bonds mature 2009 through 2028, yielding from 2.95% on a 3.25% coupon in 2013 to 4.37% on a 4.25% coupon in 2028. Bonds maturing from 2009 through 2012, 2017, 2019, 2020, and 2025 were not re-offered. The bonds, which are callable at par in 2017, are rated triple-A by all three agencies.
Texas competitively sold $74.5 million of GO student loan bonds to Lehman Brothers with a TIC of 5.08%. The bonds, subject to the alternative minimum tax, mature from 2012 through 2024, with term bonds in 2026, 2028, and 2032. Bonds maturing from 2012 to 2014, 2018, 2021 through 2024, 2026, 2028, and 2032 were not re-offered. The bonds, which are callable at par in 2018, are rated Aa1 by Moody's and AA by Standard and Poor's.
In economic data released yesterday, new factory orders for manufactured goods jumped 1.1% in April. The factory orders increase, to $445.2 billion, contrasted with the 0.1% decrease projected by IFR Markets and came after a revised 1.5% increase to $440.2 billion in March.
Excluding transportation, the level of all new manufacturing orders rose 2.6% to about $389.2 billion in April, following a 2.6% jump in March to $379.3 billion. The increase compared to a 0.9% increase projected by IFR.