The municipal market was unchanged yesterday as participants focused mostly on new issues, leaving the secondary largely quiet.In the new-issue market yesterday, Goldman, Sachs & Co. priced $245.8 million of sales tax revenue refunding bonds for the Los Angeles County Metropolitan Transportation Authority.
The bonds mature from 2010 through 2020, with yields ranging from 0.85% with a 0.75% coupon in 2010 to 3.94% with a 5% coupon in 2020.
The bonds, which are not callable, are rated A1 by Moody’s Investors Service and AA-plus by Standard & Poor’s.
New Jersey competitively sold $228.8 million of general obligation bonds to Wachovia Bank NA with a true interest cost 2.99%. The bonds mature from 2012 through 2022, with yields ranging from 2.60% with a 5% coupon in 2015 to 3.82% with a 5.25% coupon in 2022.
Bonds maturing from 2012 through 2012 were not formally re-offered. The bonds, which are not callable, are rated Aa3 by Moody’s, AA by Standard & Poor’s, and AA-minus by Fitch Ratings.
Morgan Stanley priced $219.5 million of tax-exempt bonds the Metropolitan Water District of Southern California in three series.
Bonds from the $106.7 million Series B mature from 2020 through 2030, with yields ranging from 3.37% with a 4% coupon in 2020 to 4.71% with a 5% coupon in 2030.
Bonds from the $21.6 million Series B mature from 2012 through 2020, with yields ranging from 1.28% with a 2% coupon in 2012 to 3.37% with a 4% coupon in 2020.
Bonds from the $91.2 million Series C mature in 2029, 2031, and 2035, yielding 4.61%, 4.78%, and 4.95%, respectively, all with 5% coupons.
All the bonds are callable at par in 2019. The credit is rated Aa2 by Moody’s, AAA by Standard & Poor’s, and AA-plus by Fitch.
Additionally, Morgan Stanley priced $78.5 million of taxable Build America Bonds for the water district.
The bonds mature in 2026 and 2039, yielding 5.75%, or 3.74% after the 35% federal subsidy, priced at par, and 6.38%, or 4.14% after the federal subsidy, with a 6.25% coupon.
The bonds are callable at par in 2019. The yields were priced at 205 and 180 basis points over the comparable U.S. Treasury yields, respectively.
In other BAB activity, Merrill Lynch & Co. priced $84.7 million of bonds for Florida’s Broward County School Board, $64.4 million of which were BABs.
Bonds from the $20.3 million tax-exempt series mature from 2025 through 2027, yielding 5.15% with a 5% coupon, 5.27% with a 5.125% coupon, and 5.37% with a 5.25% coupon, respectively.
The $64.4 million BAB series matures in 2034, though pricing information was not available by press time.
However, the bonds were reportedly priced to yield 295 basis points over the comparable Treasury yield.
Traders said tax-exempt yields in the secondary market were mostly flat.
“It’s fairly quiet today,” a trader in New York said. “Things are kind of winding down a bit. I’m not really seeing too much going on. There’s not much movement, it’s pretty flat overall. I’d call it just unchanged.”
“People were sort of focused on the new issues today, if they were focusing on anything,” a trader in Los Angeles said. “Didn’t see much trading going on in the secondary. It was a pretty quiet day overall. Not a whole lot of activity, and not a whole lot of movement. The market was just unchanged, I wouldn’t call it better or worse by any margin.”
The Treasury market showed losses yesterday. The yield on the benchmark 10-year note, which opened at 3.54%, was quoted near the end of the session at 3.70%.
The yield on the two-year note was quoted near the end of the session at 0.96% after opening at 0.92%. The yield on the 30-year bond, which opened at 4.45%, was quoted near the end of the session at 4.58%.
As of Wednesday’s close, the triple-A muni scale in 10 years was at 84.6% of comparable Treasuries, according to Municipal Market Data. Additionally, 30-year munis were 104.3% of comparable Treasuries.
Also, as of the close Wednesday, 30-year tax-exempt triple-A general obligation bonds were at 110.0% of the comparable London Interbank Offered Rate.
In economic data released yesterday, initial jobless claims for the week ended May 30 came in at 621,000 after a revised 625,000 the previous week.
Economists polled by Thomson Reuters had predicted 620,000 initial jobless claims.
Continuing jobless claims for the week ended May 23 came in at 6.735 million after a revised 6.750 million the previous week. Economists polled by Thomson had predicted 6.870 million continuing jobless claims.
Final first-quarter non-farm productivity came rose 1.6%, after gaining 0.8% the previous reading. Economists polled by Thomson had predicted an increase of 1.2%.
Also, final first-quarter unit labor costs gained 3.0%, after a 3.3% increase the previous reading. Economists polled by Thomson Reuters had predicted 2.9%.
