The municipal market was unchanged yesterday, with a slightly weaker tone, amid light secondary trading.
“It feels maybe a touch weaker, but there’s nothing going on,” a trader in New York said. “There’s hardly anything trading, hardly anyone around. It’s very quiet.”
“There’s a bit of a weaker tone out there — it feels like we’re a bit off, but there just isn’t enough going on to really move the scale, in my opinion,” a trader in Los Angeles said. “If there were more activity, maybe I’d say we’re off a basis point or two, but I think I’d just call it unchanged, based on how few people are actually around.”
The Treasury market showed some losses yesterday. The yield on the benchmark 10-year note opened at 3.80% and was quoted near the end of the session at 3.85%. The yield on the two-year note opened at 0.97% and was quoted near the end of the session at 1.05%. The yield on the 30-year bond was quoted near the end of the session at 4.70% after opening at 4.68%.
Yesterday’s Municipal Market Data triple-A scale yielded 2.98% in 10 years and 3.68% in 20 years, following levels of 2.96% and 3.65%, respectively, on Thursday. The scale yielded 4.13% in 30 years yesterday after Thursday’s level of 4.11%.
As of Thursday’s close, the triple-A muni scale in 10 years was at 78.3% of comparable Treasuries and 30-year munis were at 88.4%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 91.1% of the comparable London Interbank Offered Rate.
Trades reported by the Municipal Securities Rulemaking Board yesterday showed little movement. A dealer sold to a customer California 5s of 2033 at 5.67%, even with where they were sold Thursday. Bonds from an interdealer trade of Illinois Finance Authority 6.125s of 2025 at 6.27%, up one basis point from where they were sold Thursday.
A dealer bought from a customer Dormitory Authority of the State of New York 5.25s of 2023 at 3.67%, even with where they were sold Thursday. Bonds from an interdealer trade of insured New York State Thruway Authority 4.75s of 2029 yielded 4.40%, one basis point higher than where they were sold Thursday.
A dealer sold to a customer taxable Detroit City School District Build America Bonds 7.747s of 2039 at 7.78%, even with where they were sold Thursday. A dealer sold to a customer taxable New York State BABs 5.2s of 2022 at 5.55%, one basis point higher than where they were sold Thursday.
A dealer sold to a customer taxable Virginia College Building Authority BABs 5.4s of 2026 at 5.74%, even with where they were sold Thursday. A dealer sold to a customer New Hampshire Health and Education Facilities Authority 5s of 2026 at 4.61%, even with where they were sold Thursday.
Bonds from an interdealer trade of Massachusetts Health and Educational Facilities Authority 5.25s of 2028 yielded 3.78%, even with where they were sold Thursday. A dealer bought from a customer Hamden, Conn., 7.75s of 2043 at 7.52%, even with where they were sold Thursday.
Bonds from an interdealer trade of taxable New Orleans BABs 8.8s of 2039 yielded 8.29%, one basis point higher than where they were sold Thursday. A dealer bought from a customer New York’s Long Island Power Authority 5s of 2025 at 4.34%, even with where they were sold Thursday.
One of the craziest, most transformative years ever in state and local government finance will end with a whimper this week.
Municipalities are slated to sell just $74.1 million of bonds this week, according to data from The Bond Buyer and Ipreo LLC, after having floated $611.7 million last week.
The biggest deal on the docket is a $20.8 million offering from Nelson County School District Financing Corp. in Kentucky. Competitive bidding today will determine whether the bonds are sold as tax-exempt securities or as taxable debt through the Build America Bonds program.
The district had about $31.3 million in outstanding debt as of its latest annual report. With $36.4 million in net assets, the district last year spent 2.4% of its revenue paying interest on its debt.
The next-biggest competitive deal on the slate, also scheduled for sale today, is an $18.9 million sale from Ithaca, N.Y. Roughly $11.3 million of the deal is tax-exempt and the rest is taxable. The bonds are rated A1 by Moody’s Investors Service.
The tax-exempt portion carries maturities ranging from 2011 to 2027, while the taxable portion has bonds maturing as late as 2034. The proceeds of the tax-exempt portion will be used to refund bond anticipation notes issued for a pastiche of purposes, from repairing a bridge to buying software to renovating an ice skating rink. Proceeds from the taxable batch will be used to refund notes issued to build a parking garage.
Another deal on the calendar today is a $17 million public improvement bond offering from Chautauqua County, N.Y., which is rated A-plus by Standard & Poor’s. The maturities range from 2011 to 2030, with bigger principals in later maturities.
This deal will raise the county’s debt burden to $57.2 million. It has $251.2 million in net assets, and well under 1% of its revenue is used to pay interest on debt.
Activity in the new-issue market was light yesterday, as was the economic calendar.