Munis Unchanged; Treasuries Show Losses

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The municipal market was largely unchanged yesterday.

“It’s quiet. There’s not a lot to sink our teeth into,” a trader in New York said. “Some [economic] numbers released were slightly neutral. The market is kind of neutral. Eyes are on the stock market, and when the stock market goes in one direction bonds will go in the other. Just one of those days.”

The Treasury market showed some losses today. The yield on the benchmark 10-year Treasury note, which opened at 3.90%, finished at 3.98%. The yield on the two-year note was quoted near the end of the session at 2.46% after opening at 2.41%.

In the new-issue market yesterday, Banc of America Securities LLC priced $600 million of aviation revenue bonds for Miami-Dade County for the benefit of Miami International Airport, some of which are subject to the alternative minimum tax. Bonds of the $433.3 million Series A, subject to the AMT, mature from 2024 through 2028, with term bonds in 2033 and 2038 and 2041. The 2038 and 2041 terms have two maturities each. Yields range from 5.2% with a 5.5% coupon in 2024 to 5.4% with a 5.5% coupon in 2041. All bonds are insured by Assured Guaranty Corp. except one of the term bonds in 2038 and both term bonds in 2041, which are insured by Financial Security Assurance Inc.

Bonds from the $166.7 million Series B, which is not subject to the AMT, mature 2016 through 2023, with two term bonds in 2028, and one each in 2038 and 2041. Yields range from 3.92% with a 4% coupon in 2016 to 5.05% with a 5% coupon in 2041. All bonds are insured by Assured Guaranty, except for the bonds maturing in 2038 and 2041, which are insured by FSA.

Bonds from both series, which are callable at par in 2018, have underlying credit ratings of A2 from Moody’s Investors Service, A-minus from Standard & Poor’s, and A from Fitch Ratings.

Morgan Stanley priced $487.2 million of health facilities improvement bonds for the New York State Dormitory Authority in multiple series. Bonds from $81.9 million Subseries 2-1 mature from 2015 through 2019, with yields ranging from 3.67% with a 3.65% coupon in 2015 to 4.17% with a 4.15% coupon in 2019. Bonds from $80.2 million Subseries 2-2 mature from 2019 through 2023, with yields ranging from 4.17% with a 4.15% coupon in 2019 to 4.48% with a 5% coupon in 2023. Bonds from $80.5 million Subseries 2-3 mature from 2023 through 2027, with yields ranging from 4.48% with a 5% coupon in 2023 to 4.65% with a 4.5% coupon in 2027.

Bonds from the $82.1 million Subseries 2-4 mature in 2027 and 2028, with a term bond in 2030. Yields range from 4.65% with a 5% coupon in 2027 to 4.853% with a 4.75% coupon in 2028. Bonds from the $82.3 million Subseries 2-5 mature in 2032, with 4.81% yields and 4.8% and 5% coupons. Bonds from the $80.2 million 2008 Series 1 mature from 2012 through 2019, with yields ranging from 3.18% with a 5% coupon in 2012 to 4.17% with a 5% coupon in 2019.

Bonds from all series, which are callable at par in 2018, have underlying credit ratings of A1 from Moody’s, AA-minus from Standard & Poor’s and A-plus from Fitch.

Clark County, Nev., competitively sold $400 million of general obligation bond bank bonds to Lehman Brothers at a true interest cost of 4.6308%. The bonds mature 2011 through 2030, with terms bonds in 2033 and 2038. Yields range from 2.75% on a 5% coupon in 2011 to 4.66% on a 5% coupon in 2038. Bonds maturing in 2021 through 2023 and 2026 through 2029 were not reoffered. The bonds, which are callable in 2018, are rated Aa1 by Moody’s and AA-plus Standard & Poor’s.

Citi priced $400 million of GOs for Connecticut. Bonds mature 2009 through 2028, with yields ranging from 2.26% on a coupon of 3% in 2010 to 4.45% on a coupon of 4.375% in 2028. Bonds maturing in 2009 were not reoffered. The bonds, which are callable in 2018, are rated Aa3 by Moody’s and AA by Standard & Poor’s and Fitch.

RBC Capital Markets priced $250 million of revenue bonds for the Allegheny County, Pa., Hospital Development Authority. The Series B bonds mature from 2009 through 2018, yielding 1.87% with a 4% coupon in 2009 to 4.4% with a 5% coupon in 2018. The bonds, which are callable in 2018, are rated Aa3 by Moody’s and AA-minus by Standard & Poor’s and Fitch.

Banc of America priced $196.8 million of revenue bonds for the California Infrastructure and Economic Development Bank. The bonds mature 2009 through 2014, with yields ranging from 2.2% on a 4% coupon in 2009 to 3.58% on a 5% coupon in 2014. The bonds, which are not callable, are rated A2 by Moody’s and A-minus by Standard & Poor’s.

In economic data released yesterday, final first-quarter non-farm productivity rose 2.6% after a plus-2.2% annual rate the previous reading. Economists polled by IFR Markets had predicted it would be up 2.5%.

Final first-quarter unit labor costs rose 2.2% after a 2.2% rise the previous reading. Economists polled by IFR had predicted a 1.9% gain.

The Institute for Supply Management’s non-manufacturing business activity composite index was 51.7 in May, down from 52.0 in April. Economists polled by IFR Markets had expected a 51.0 level. 

 

 

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