The municipal market was largely unchanged yesterday, as the New York City Transitional Finance Authority priced an $800 million transaction for institutions.In the new-issue market, JPMorgan priced $800 million of future tax-secured bonds for the TFA. This follows a two-day retail order period, during which $281 million of bonds were sold.
The bonds mature from 2011 through 2029, with term bonds in 2034, 2036, and 2038. Yields range from 0.93% with a 2% coupon in 2011 to 5.04% with a 5% coupon in 2038.
The bonds, which are callable at par in 2019, are rated Aa2 by Moody’s Investors Service, AAA by Standard & Poor’s, and AA-plus by Fitch Ratings.
The TFA also competitively sold $100 million of taxable subordinate bonds to JPMorgan with a true interest cost of 4.91%. The bonds mature from 2017 through 2021, and were not formally re-offered. The bonds are not callable.
Traders said tax-exempt yields in the secondary market were mostly unchanged yesterday.
“We’re fairly flat,” a trader in New York said. “Some business is getting done, but there’s just not a whole lot of movement. The tone is maybe a little bit firmer, but it’s just pretty flat overall.”
“We’re actually somewhat mixed,” a trader in Los Angeles said. “On the shorter end, we’re firming up in spots, and on the long end, we’re actually cheapening up a bit. That intermediate range is pretty flat, but I guess if you had to average everything out, you’d just call the whole thing flat. There’s some trading activity, but it’s not extensive. Just a pretty unchanged day I guess on the whole.”
Trades reported by the Municipal Securities Rulemaking Board yesterday showed little movement. Bonds from an interdealer trade of Pennsylvania Turnpike Commission taxable Build America Bonds, 6.11s of 2039 yielded 6.17%, even with where they traded Wednesday. A dealer bought from a customer Dormitory Authority of the State of New York 5s of 2039 at 5.11%, even with where they were sold Wednesday.
A dealer sold to a customer Texas Transportation Commission 4.75s of 2037 at 5.17%, up one basis point from where they traded Wednesday. A dealer sold to a customer insured Los Angeles Unified School District 5s of 2022 at 4.45%, down one basis point from where they were sold Wednesday.
A dealer sold to a customer Louisiana Public Facilities Authority 5.5s of 2032 at 4.53%, one basis point lower than where they were sold Wednesday. A dealer bought from a customer California 5.05s of 2036 at 6.59%, one basis point higher than where they traded Wednesday. A dealer sold to a customer Washington 5s of 2031 at 4.75%, even with where they were sold Wednesday.
The Treasury market showed some losses yesterday. The yield on the benchmark 10-year note, which opened at 3.54%, finished at 3.68%. The yield on the two-year note finished at 1.05% after opening at 0.93%. The yield on the 30-year bond, which opened at 4.44%, finished at 4.57%.
As of Wednesday’s close, the triple-A muni scale in 10 years was at 84.2% of comparable Treasuries, according to Municipal Market Data. Additionally, 30-year munis were 104.3% of comparable Treasuries. Also, as of the close, 30-year tax-exempt triple-A general obligation bonds were at 111.0% of the comparable London Interbank Offered Rate.
Elsewhere in the new-issue market yesterday, JPMorgan priced $201.3 million of variable-rate demand health facilities revenue bonds for the Iowa Finance Authority. The bonds mature from 2010 through 2019, with term bonds in 2029 and 2035. Yields range from 2.15% with a 5% coupon in 2011 to 5.80% with a 5.625% coupon in 2035. Bonds maturing in 2010 were decided via sealed bid. The bonds, which are callable at par in 2019, are insured by Assured Guaranty Corp. The underlying credit is rated Aa3 by Moody’s and AA-minus by Fitch.
JPMorgan also priced a second set of variable-rate demand health facilities revenue bonds for the authority, worth $150 million. The bonds mature from 2010 through 2019, with term bonds in 2029 and 2037.
Yields range from 2.15% with a 3% coupon in 2011 to 5.80% with a 5.625% coupon in 2037. Bonds maturing in 2010 were decided via sealed bid. The bonds, which are callable at par in 2019, are insured by Assured Guaranty.
Additionally, JPMorgan priced a third, $50 million series of the bonds for the authority, which mature in 2039, yielding 2.84% with a 5% coupon. The bonds are not callable.
In economic data released yesterday, initial jobless claims for the week ended July 18 came in at 554,000, after a revised 524,000 the previous week. Economists polled by Thomson Reuters had predicted 550,000 initial jobless claims.
Continuing jobless claims for the week ended July 11 came in at 6.225 million after a revised 6.313 million the previous week. Economists polled by Thomson Reuters had predicted 6.320 million continuing jobless claims.
Existing home sales increased in June to 4.89 million. The rise was larger than the gain to a 4.84 million predicted by Thomson Reuters’ poll of economists and followed a revised 1.3% increase to 4.72 million units in May.