Tax-exempts were unchanged to slightly firmer in light Monday activity. Traders said municipal yields were flat to lower by one or two basis points."It's fairly quiet out there, but the tone is a bit firmer," a trader in New York said. "There's not a whole lot trading, people are on the sidelines for the most part, but the market feels a bit better. You could call it better by a basis point or so, maybe more on the long end, that's true, but I'd say we're fairly unchanged, just with a better tone."
The Treasury market showed gains yesterday. The yield on the benchmark 10-year note, which opened at 3.78%, 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 1.15% after opening at 1.20%. The yield on the 30-year bond, which opened at 4.51%, was quoted near the end of the session at 4.45%.
As of Friday's close, the triple-A muni scale in 10 years was at 87.6% of comparable Treasuries, according to Municipal Market Data. Additionally, 30-year munis were 103.8% of comparable Treasuries. Also, as of the close Friday, 30-year tax-exempt triple-A general obligation bonds were at 107.1% of the comparable London Interbank Offered Rate.
The municipal market this week will again see a generous slate of new issues, led by $800 million of personal income tax revenue bonds from the Dormitory Authority of the State of New York in the long-term market and $500 million of Idaho tax anticipation notes in the short-term market.
An estimated $7.85 billion is expected - $6.76 billion of negotiated deals and $1.08 billion of competitive offerings, according to Ipreo LLC and The Bond Buyer. That comes on the heels of a revised total of $6.91 billion of negotiated and competitive deals last week and several recent heavy-supply weeks, according to Thomson Reuters.
The Dormitory Authority will kick off the brisk activity expected in the Northeast when it issues the PIT bonds tomorrow, following a retail order period today by co-senior managers JPMorgan and Ramirez & Co. The deal will consist of $587 million of Series 2009A new-money bonds, $198.7 million of Series 2009B tax-exempt refunding bonds, and $10 million of Series 2009C federally taxable refunding bonds. The bonds are structured to mature from 2010 to 2039 and are expected to have a natural AAA from Standard & Poor's and a AA-minus from Fitch Ratings.
Also, one of the week's largest deals will take place in the short-term market today when Idaho issues its one-year Tan sale through senior manager Seattle-Northwest Securities Corp. The notes are rated MIG-1 by Moody's Investors Service, SP-1-plus by Standard & Poor's, and F1-plus by Fitch and mature in 2010.
In the new-issue market yesterday, JPMorgan priced $164 million of pollution control revenue refunding bonds for Maricopa County, Ariz., in multiple series.
Bonds from the $36 million Series A mature in 2029, yielding 6.00% priced at par. Bonds from the $32 million Series B mature in 2029, yielding 5.50% priced at par. Bonds from the $32 million Series C mature in 2029, yielding 5.75% priced at par. Bonds from the $32 million Series D mature in 2029, yielding 6.00% priced at par. Bonds from the $32 million Series E mature in 2029, yielding 6.00% priced at par.
None of the bonds are callable. The credit is rated Baa2 by Moody's, BBB-minus by Standard & Poor's, and BBB by Fitch.
In the competitive market, Nassau County, N.Y., sold $135 million of general improvement GOs to Barclays Capital with a true interest cost of 5.07%. The bonds are slated to mature from 2010 through 2039. The bonds, which are callable at par in 2019, are rated A2 by Moody's and A-plus by both Standard & Poor's and Fitch.
Nassau County also competitively sold $14.7 million of sewer and storm water resources district GOs to Roosevelt & Cross with a TIC of 5.10%. The bonds mature from 2010 through 2025, with term bonds in 2027, 2029, and 2039. The bonds are callable at par in 2019.
Morgan Stanley priced $100 million of unlimited tax school building and refunding bonds for the Austin Independent School District. The bonds mature from 2010 through 2031, with a term bond in 2034. Yields range from 1.27% with a 3% coupon in 2011 to 5.08% with a 5% coupon in 2034. Bonds maturing in 2010 were decided via sealed bid. The bonds, which are callable at par in 2019, are rated Aa1 by Moody's, AA-plus by Standard & Poor's, and AA by Fitch.
Morgan Keegan & Co. priced $49 million of unlimited-tax road bonds for Fort Bend County, Tex. The bonds mature from 2010 through 2029, with yields ranging from 0.55% with a 3% coupon in 2010 to 4.80% with a 5% coupon in 2029. The bonds, which are callable at par in 2018, are rated Aa2 by Moody's and AA-plus by Standard & Poor's.
JPMorgan priced for retail investors $49 million of revenue bonds for the Hillsborough County, Fla., Aviation Authority. The bonds mature from 2011 through 2018, with yields ranging from 2.44% with a 3% coupon in 2011 to 4.66% with a 5% coupon in 2018. The bonds, which are not callable, are rated Aa3 by Moody's, A-plus by Standard & Poor's, and AA-minus by Fitch.
RBC Capital Markets priced $27.5 million of unlimited tax school building bonds for Texas' New Caney Independent School District. The bonds mature in 2010, 2012, and from 2016 through 2029, with term bonds in 2034 and 2039. Yields range from 0.95% with a 4% coupon in 2010 to 5.15% with a 5% coupon in 2039. The bonds, which are callable at par in 2019, are insured by Assured Guaranty Corp. The underlying credit is rated A3 by Moody's and A by Standard & Poor's.
California sent word yesterday that it paid investors on time and in full $3.94 billion in principal and interest on revenue anticipation notes sold last October. This follows the Golden State last week being put on watch by both Moody's and Standard & Poor's.
The economic calendar was light yesterday.