The municipal market was quiet and unchanged yesterday, while Houston came to market with roughly $450 million of debt.“There isn’t a lot happening. I am not seeing any activity,” a trader in New York said. “I wish I could put this in trade to show that it’s up there and different, but so far the day’s been a complete zero. There is nothing on my trade blotter. It’s very nondescript.”
“The market is fairly quiet but there is a very good feel to it,” a trader in Los Angeles said. “I would say that the activity is relatively muted among the institutional buyers but there still is a decent tone to it and retail seems to be participating.”
In the new-issue market yesterday, JPMorgan priced $449.4 million of senior-lien revenue and refunding bonds for Houston. The bonds mature from 2015 through 2029, with term bonds in 2034 and 2039.
Yields range from 3.28% with a 5% coupon in 2015 to 5.67% with a 5.5% coupon in 2039. Yields were selectively lowered by five to seven basis points at a repricing.
The bonds, which are callable at par in 2018, are rated Aa3 by Moody’s Investors Service and AA-minus by Standard & Poor’s.
Meanwhile, the Treasury market was mixed yesterday. The yield on the benchmark 10-year note, which opened at 3.66%, was quoted near the end of the session at 3.63%. The yield on the two-year note was quoted near the end of the session at 1.18% after opening at 1.15%. The yield on the 30-year bond, which opened at 4.50%, was quoted near the end of the session at 4.44%.
The Treasury auctioned $28 billion of seven-year notes, with a 3 1/4% coupon, a 3.37% high yield, a price of 99.26.
The bid-to-cover ratio was 2.63. Federal Reserve banks bought $701.5 million for their own accounts in exchange for maturing securities.
As of Wednesday’s close, the triple-A muni scale in 10 years was at 82.0% of comparable Treasuries, according to Municipal Market Data.
Thirty-year munis were 104.2% of comparable Treasuries. As of the close Wednesday, 30-year tax-exempt triple-A general obligation bonds were at 108.6% of the comparable London Interbank Offered Rate.
In economic data released yesterday, initial jobless claims for the week ended July 25 came in at 584,000, after a revised 559,000 the previous week.
Economists polled by Thomson Reuters had predicted 570,000 initial jobless claims.
Continuing jobless claims for the week ended July 18 came in at 6.197 million after a revised 6.251 million the previous week. Economists polled by Thomson Reuters had predicted 6.300 million continuing jobless claims.
Alan Levenson, chief economist at T. Rowe Price Associates Inc., said yesterday’s jobless claims data had little impact on the Treasury market.
“They were just a touch weaker than had been expected,” he said. “But I think that they suggested that labor markets will continue to heal in a gradual pace.”
Elsewhere in the new-issue market yesterday, JPMorgan priced $102.6 million of residential mortgage revenue bonds for the Texas Department of Housing and Community Affairs in two series. Bonds from the $80 million Series A, which are not subject to the alternative minimum tax, mature from 2011 through 2019, with term bonds in 2024, 2029, 2034, and 2039. Yields range from 1.4% priced at par in 2011 to 5.45% priced at par in 2039. Bonds from the $22.6 million Series B, which are subject to the AMT, mature from 2010 through 2018, with term bonds in 2019 and 2022.
Yields range from 1.65% priced at par in 2010 to 5.25% priced at par in 2022. All the bonds are callable at par in 2019 and are rated triple-A by both Moody’s and Standard & Poor’s.
First Southwest Co. priced $29.1 million of unlimited-tax schoolhouse bonds for Texas’ Alvin Independent School District. Bonds from the $6.58 million unlimited-tax schoolhouse bonds Series 2001B mature in 2022 and 2023, yielding 3.90% with a coupon of 3.875% and 4% with a 4.25% coupon, respectively.
Bonds from the $22.5 million unlimited-tax schoolhouse adjustable-rate Series 2004B mature in 2028 and 2029, yielding 4.42% with a coupon of 5% and 4.59% with a 4.75% coupon, respectively. All bonds are callable at par in 2019, with ratings of triple-A from both Moody’s and Standard & Poor’s.
California’s Ceres Unified School District competitively sold $27.9 million of general obligation bonds to Morgan Stanley with a true interest cost of 5.23%. The bonds, which mature from 2010 to 2032, with a term bond in 2038, were not formally re-offered. They are callable at 101% in 2018, declining to par in 2019, and are insured by Assured Guaranty Corp.
Also, Wednesday, Morgan Stanley repriced $563.8 million of bonds for the Indianapolis Local Public Improvement Bond Bank.
The bonds mature from 2011 through 2024, with term bonds in 2029 and 2038. Yields range from 2.07% with a 3% coupon in 2011 to 5.97% with a 5.75% coupon in 2038. The bonds are callable at par in 2019. Most of the bonds are insured by Assured Guaranty. Portions of bonds maturing in 2011, 2012, 2013, 2029, and 2038 were uninsured. The underlying credit is rated A3 by Moody’s, AA-minus by Standard & Poor’s, and A-minus by Fitch.
Maria Bonello contributed to this column.