The municipal market was unchanged to slightly firmer yesterday, as new issues took center stage.
In the new-issue market, Goldman, Sachs & Co. priced $709.3 million of tax-exempt and taxable income-tax secured revenue bonds for the District of Columbia in two series.
Bonds from the $695.2 million tax-exempt Series A mature from 2017 through 2031, with yields ranging from 2.50% with a 3% coupon in 2017 to 4.27% with a 5% coupon in 2031. The bonds are callable at par in 2020, except bonds maturing in 2020, which are not callable.
Bonds from the $14.1 million taxable Series B mature in 2017 and were not formally re-offered.
The credit is rated Aa2 by Moody’s Investors Service, AAA by Standard & Poor’s, and AA by Fitch Ratings.
In addition, Morgan Stanley priced $650.1 million of bonds for Missouri-based Ascension Health through five conduit issuers.
The $93.8 million Series A is being offered through the Connecticut Health and Educational Facilities Authority. The bonds mature in 2040, yielding 4.77% with a 5% coupon.
The $178.5 million Series B is being offered through the Michigan State Hospital Finance Authority. The bonds mature from 2013 through 2025, with yields ranging from 1.70% with a 5% coupon in 2013 to 4.47% with a 5% coupon in 2025.
The $146.3 million Series C is being offered through the Rutherford County, Tenn., Health and Educational Facilities Board. The bonds mature in 2040, yielding 4.90% with a 5% coupon.
The $63.5 million Series D is being offered through the Tarrant County, Tex., Cultural Education Facilities Corp. The bonds mature in 2029, yielding 4.76% with a 5% coupon.
The $168.0 million Series E is being offered through the Wisconsin Health and Educational Facilities Authority. The bonds mature in 2030 and 2033, and yield 4.82% and 4.90%, respectively, each with 5% coupons.
All the bonds are callable at par in 2019 and are rated Aa1 by Moody’s, AA by Standard & Poor’s, and AA-plus by Fitch.
RBC Capital Markets priced $577.1 million of bonds for the New York State Thruway Authority in two series, including $277 million of taxable Build America Bonds.
The BABs mature in 2019, 2020, 2025, and 2030, yielding 4.55%, 4.65%, 5.45%, and 5.88%, or 2.96%, 3.02%, 3.54%, and 3.82% after the 35% federal subsidy, respectively.
The bonds were priced to yield between 85 and 175 basis points over the comparable Treasury yield, and have a make-whole redemption at Treasuries plus 25 basis points.
The $300.1 million tax-exempt series matures from 2011 through 2023, with a term bond in 2026. Yields range from 0.80% with a 3% coupon in 2012 to 3.95% with a 5% coupon in 2026. Bonds maturing in 2011 were not formally re-offered. The bonds are callable at par in 2020.
The bonds are rated AA by Standard & Poor’s and AA-minus by Fitch.
JPMorgan priced for retail investors $2 billion of GO bonds for California. This is the second day of the retail order period ahead of today’s institutional pricing.
The bonds mature from 2011 through 2030, with term bonds in 2033, 2035, and 2040. Yesterday’s retail yields were not available, but Tuesday’s yields ranged from 1.20% with a 2% coupon in 2012 to 5.72% with a 5.625% coupon in 2035.
Bonds maturing in 2011 will be decided via sealed bid. Bonds maturing in 2030, 2033, and 2040 were not offered during the retail order period. So far, $1.15 billion has been sold to retail investors.
The bonds, which are callable at par in 2020, are rated Baa1 by Moody’s, A-minus by Standard & Poor’s, and BBB by Fitch.
Traders said tax-exempt yields in the secondary market were flat to slightly lower.
“There’s a little bit of firmness out there, but it’s not more than a basis point or so right now,” a trader in New York said. “There’s decent activity, deals are getting done. But the focus is on the new issues today.”
“You could call it unchanged and not be wrong, but I do see somewhat of a firmer tone,” a trader in Los Angeles said. “It’s more the intermediate part of the curve that you’re seeing any kind of movement. The long end in particular is just flat.”
The Treasury market showed some losses yesterday. The benchmark 10-year note was quoted near the end of the session with a yield of 3.72% after opening at 3.70%.
The yield on the two-year was quoted near the end of the session at 0.92% after opening at 0.87%. The yield on the 30-year bond finished at 4.69% after opening at 4.68%.
The Municipal Market Data triple-A scale yielded 2.80% in 10 years and 3.78% in 20 years yesterday, after Tuesday’s levels of 2.80% and 3.79%. The scale yielded 4.15% in 30 years yesterday, matching Tuesday’s level.
Tuesday’s triple-A muni scale in 10 years was at 75.7% of comparable Treasuries and 30-year munis were at 88.7%, according to MMD, while 30-year tax-exempt triple-A GOs were at 92.8% of the comparable London Interbank Offered Rate.
In economic data released yesterday, merchant wholesalers posted a 0.2% decrease in inventories in January, while sales rose 1.3%, following a revised 1.0% decrease to $382.8 billion in December, and following December’s revised 1.2% gain to $342.4 billion.
Economists polled by Thomson Reuters predicted a 0.6% increase in wholesale sales and a 0.2% rise in wholesale inventories.
