The municipal market was weaker by about three basis points overall yesterday, as the Los Angeles Department of Airports came to market with $930.2 million of debt in the primary.
“We’re definitely cheapening up some,” a trader in New York said. “I’d say we’re down a good two or three basis points overall, maybe more like three to five in spots. We’ve been carrying around a weaker tone the whole week, but today, we’re feeling it more so than we have the past few days.”
“I’m still not seeing too much change out on the long end, but we’re certainly weaker across the board,” a trader in Los Angeles said. “We’re maybe down a basis point or so on the long end, but everywhere else, you’re talking at least three basis points, probably closer to around five.”
In the new-issue market yesterday, Siebert Brandford Shank & Co. priced $930.2 million of senior revenue bonds for the Los Angeles Department of Airports.
The bonds mature from 2014 through 2032, with term bonds in 2035 and 2040. Yields range from 1.50% with a 5% coupon in 2014 to 4.89% with a 5% coupon in 2040.
The bonds, which are callable at par in 2020, are rated Aa3 by Moody’s Investors Service and AA by both Standard & Poor’s and Fitch Ratings.
The Treasury market showed losses yesterday. The benchmark 10-year note was quoted near the end of the session with a yield of 3.84% after opening at 3.68%. The yield on the two-year was quoted near the end of the session at 1.10% after opening at 1.03%. The yield on the 30-year bond was quoted near the end of the session at 4.73% after opening at 4.60%.
The Municipal Market Data triple-A scale yielded 2.95% in 10 years and 3.81% in 20 years yesterday, compared to Tuesday’s levels of 2.88% and 3.78%. The scale yielded 4.16% in 30 years yesterday, following 4.15% on Tuesday.
Tuesday’s triple-A muni scale in 10 years was at 78.3% of comparable Treasuries and 30-year munis were at 90.2%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 95.4% of the comparable London Interbank Offered Rate.
Elsewhere in the new-issue market yesterday, Goldman, Sachs & Co. priced $550 million of bonds for the Chicago Transit Authority in two series, including $505.4 million of taxable Build America Bonds.
The BABs mature from 2020 through 2024, with a term bond in 2040. Yields range from 5.07% priced at par in 2020, or 3.30% after the 35% federal subsidy, to 6.20% priced at par in 2040, or 4.03% after the subsidy.
The bonds were priced to yield between 140 and 195 basis points over the comparable Treasury yield, and contain a make-whole call at Treasuries plus 25 basis points.
The $44.6 million series of sales tax receipts revenue bonds matures from 2015 through 2019, with yields ranging from 2.43% with a 4% coupon in 2015 to 3.56% with a 5% coupon in 2019. These bonds were not callable.
The credit is rated A1 by Moody’s and AA by Standard & Poor’s.
California’s East Side Union High School District competitively sold $100 million of general obligation bonds to Wells Fargo Securities with a true interest cost of 4.98%.
The bonds mature from 2011 through 2030, with term bonds in 2035 and 2039. Yields range from 0.75% with a 3% coupon in 2011 to 4.91% with a 4.75% coupon in 2030. Bonds maturing in 2035 and 2039 were not formally re-offered.
The bonds, which are callable at par in 2019, are rated AAA by Standard & Poor’s.
Morgan Keegan & Co. priced $87.7 million of unlimited-tax building and refunding bonds for Texas’ Leander Independent School District in two series.
Bonds from the $67.0 million new money series mature from 2011 through 2031, with term bonds in 2035 and 2040. Yields range from 0.50% with a 2% coupon in 2011 to 4.32% with a 5% coupon in 2040. The bonds are callable at par in 2019.
The deal also contains a $20.7 million refunding series of capital appreciation bonds, which mature from 2010 through 2024, with yields to maturity ranging from 0.50% in 2010 to 4.61% in 2024. The bonds are callable at par in 2019.
The deal is backed by the Texas Permanent School Fund guarantee program. The underlying credit is rated AA-minus by both Standard & Poor’s and Fitch.
The University System of Maryland competitively sold $81.3 million of taxable BABs to Wells Fargo with a TIC of 3.34%.
The BABs mature from 2019 through 2030, with yields ranging from 4.35% priced at par in 2019, or 2.83% after the 35% federal subsidy, to 5.45% with a 5.4% coupon in 2030, or 3.54% after the subsidy.
The bonds, which are callable at par in 2020, are rated Aa2 by Moody’s, AA-plus by Standard & Poor’s, and AA by Fitch.
In economic data released yesterday, durable goods orders increased 0.5% in February to $178.1 billion.
Excluding transportation goods, durable goods rose 0.9% to $132.1 billion.
Economists expected durable goods orders to be up 0.6% in February and for orders excluding transportation goods to increase 0.5%, according to the median estimate from Thomson Reuters.
New home sales dropped to a record low of 308,000 homes purchased at an annual rate in February.
Sales fell 2.2% from the January sales total, which was revised higher to 315,000 from 309,000. December sales were revised to 345,000 from 348,000.
Economists polled by Thomson Reuters expected 320,000 new home sales for the month, according to the median estimate.