The municipal market was unchanged with a firmer tone yesterday, as the week's largest scheduled transaction - $700 million of Utah Transit Authority bonds - priced in the primary market.
"There's definitely a firmer tone in the market, but I think we're flat overall," a trader in New York said. "You can maybe get a basis point or two on the long end, but aside from that, we're unchanged."
The Treasury market showed some gains yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.51%, finished at 3.48%. The yield on the two-year note was quoted near the end of the session at 1.66% after opening at 1.77%.
"It's been fairly quiet," a trader in San Francisco said. "I didn't see much movement at all. Treasuries did see a little bit of a bump, especially on the two-year, but munis didn't follow. We were basically unchanged."
In economic data released yesterday, durable goods orders dipped 1.7% in February, after a revised 4.7% drop the previous month. Economists polled by IFR Markets predicted a 0.7% rise.
Durable goods orders excluding transportation declined 2.6% in February after a revised 1.0% drop the previous month. Economists polled by IFR had predicted a 0.4% decline.
Also, sales of new single-family homes dropped 1.8% to a 590,000 seasonally adjusted annual rate in February. The February figure came after an upwardly revised 601,000 rate in January, a 1.8% drop. IFR Markets' poll of economists had predicted a 575,000 sales level for February.
In the new-issue market yesterday, UBS Securities LLC priced $700 million of sales tax revenue bonds for the Utah Transit Authority. Pricing information was not available by press time. The bonds were slated to mature from 2018 through 2028, with term bonds in 2033 and 2038. The credit is rated Aa3 by Moody's Investors Service, AAA by Standard & Poor's, and AA by Fitch Ratings.
The UTA last sold sales tax revenue bonds in May 2007, when it refunded $261.1 million over two series, priced by Morgan Stanley. The larger series - $132.3 million of capital appreciation bonds - matures from 2018 through 2027, with yields ranging from 4.55% in 2018 to 5.05% in 2037. The smaller series - worth $128.8 million of current interest bonds - matures from 2016 through 2020, with term bonds in 2024, 2028, 2031, and 2035. Yields ranged from 3.98% in 2016 to 4.40% in 2035, all with 5% coupons. All the bonds were insured by MBIA Insurance Corp.
Among 5% coupon paper in the prior deal, bonds maturing in 2016 were tightest to that day's Municipal Market Data triple-A yield curve, with yields 14 basis points over the curve. Bonds maturing in 2035 were widest to the scale, with yields 18 basis points over.
Bear, Stearns & Co. priced $337.1 million of joint revenue and refunding bonds for Dallas Fort Worth International Airport in multiple series, subject to the alternative minimum tax. Bonds from a $75 million series, and from a $50 million series, mature in 2018, 2023, and 2038, yielding 5.75%, 6.00%, and 6.25%, respectively, all priced at par. Bonds from a $56.38 million series mature in 2013 and 2018, yielding 4.75% and 5.75%, respectively, both priced at par. Bonds from two separate $49.7 million series mature in 2009, 2018, and 2024, yielding 3.50%, 5.75%, and 6.10%, all priced at par.
Bonds from all these series are insured by MBIA. The deal also contains a $56.40 million series, which matures in 2018, yielding 6.125%, priced at par. These bonds are insured by XL Capital Assurance Inc. All bonds are callable at par in 2009. The underlying credit is rated A1 by Moody's, A-plus by Standard & Poor's, and AA-minus by Fitch.
Citi priced $227.3 million of revenue refunding bonds for Michigan's Kent Hospital Finance Authority. The bonds contain four maturities in 2047, yielding 4.20% with a 5% coupon, 4.57% with a 5.25% coupon, 4.57% with a 4.25% coupon, and 4.70% with a 5.5% coupon. The bonds are rated Aa3 by Moody's and AA by Standard & Poor's.
RBC Capital Markets priced $177 million of TECO project thermal utility facility revenue bonds for Texas' Harris County Health Facilities DevelopmentCorp. The bonds mature from 2011 through 2028, with term bonds in 2032 and 2037. Yields range from 2.74% with a 3.5% coupon in 2011 to 5.30% with a 5.125% coupon in 2037. The bonds, which are callable at par in 2018, are insured by Assured Guaranty Corp. The underlying credit is rated Aa3 by Moody's and AA-minus by Standard & Poor's.
UBS priced $158.7 million of senior lien public project revolving fund revenue bonds for the New Mexico Finance Authority. The bonds mature from 2008 through 2028, with term bonds in 2033 and 2038. Yields range from 2.00% with a 3.5% coupon in 2008 to 5.11% with a 5% coupon in 2038. The bonds, which are callable at par in 2018, are rated Aa2 by Moody's, AA-plus by Standard & Poor's, and AA by Fitch.
The University of Texas System Board of Regents competitively sold $150 million of permanent university fund flexible rate notes to Goldman, Sachs & Co., with a true interest cost of 1.48%. The notes mature in July 2008, yielding 2.50%, priced at par. The credit is rated triple-A by both Moody's and Fitch.
Newport News, Va., competitively sold $58.8 million of general obligation bonds to BB&T Capital Markets. The bonds mature from 2009 through 2028, with yields ranging from 2.05% with a 4% coupon in 2009 to 4.43% with a 5% coupon in 2023. Bonds maturing in 2019, and from 2024 through 2028 were not formally re-offered. The bonds, which are callable at par in 2018, are rated Aa2 by Moody's and AA by Standard & Poor's.