The municipal market was weaker Wednesday amid light to moderate secondary trading activity as new issuance took center stage, led by a Connecticut offering in excess of $700 million.
“We’re sort of picking up where we left off yesterday, though not quite to the same extent,” a trader in New York said. “We’re off maybe four or five basis points in 10 years, and perhaps two or three weaker further out. On the really short end, maybe one or two weaker.”
In the new-issue market Wednesday, Citi priced $736.6 million of taxable and tax-exempt debt for Connecticut, including $400.5 million of taxable Build America Bonds.
The Series B BABs mature from 2020 through 2023 and in 2030, and were priced to yield between 140 and 210 basis points over the corresponding Treasury yields. Yields were not available by press time. The BABs contain a make-whole call at Treasuries plus 30 basis points.
The $336.1 million tax-exempt component of the deal was priced in two series.
Bonds from the $199.5 million Series A mature from 2011 through 2019, with yields ranging from 0.71% with a 5% coupon in 2012 to 2.84% with a 5% coupon in 2019.
Bonds maturing in 2011 were decided via sealed bid. The bonds are not callable.
Bonds from the $136.6 million Series C mature from 2012 through 2022, with yields ranging from 0.71% with a 2% coupon in 2012 to 3.33% with a 5% coupon in 2022.
The bonds are callable at par in 2020.
The credit is rated Aa3 by Moody’s Investors Service and AA by Standard & Poor’s and Fitch Ratings.
Municipal Market Data’s triple-A scale yielded 2.55% in 10 years Wednesday, up seven basis points from Tuesday’s 2.48%, while the 20-year scale yielded 3.48%, up five basis points from Tuesday’s 3.43%.
The scale for 30-year debt increased five basis points to 3.86% from 3.81% Tuesday.
“It’s just a weaker day, pretty much across the board,” a trader in Los Angeles said. “The focus, though, is on the primary.”
Tuesday’s triple-A muni scale in 10 years was at 93.7% of comparable Treasuries and 30-year munis were at 96.4%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 106.5% of the comparable London Interbank Offered Rate.
The Treasury market showed losses Wednesday.
The benchmark 10-year note was quoted near the end of the session at 2.73% after opening at 2.64%. The 30-year bond was quoted near the end of the session at 4.06% after opening at 4.00%.
The two-year note was quoted near the end of the session at 0.42% after opening at 0.40%.
Elsewhere in the new-issue market, Bank of America Merrill Lynch priced $410 million of subordinate toll bridge revenue bonds Wednesday for California’s Bay Area Toll Authority.
The bonds mature from 2019 through 2034, with term bonds in 2042 and 2050. Yields range from 2.99% with a 3.25% coupon in 2019 to 4.95% with a 5% coupon in 2050.
The bonds, which are callable at par in 2020, are rated A1 by Moody’s and A-plus by Standard & Poor’s.
Goldman, Sachs & Co. priced $1.1 billion of full faith and credit GO notes for Michigan.
The notes mature in Sept. 2011, yielding 0.45% with a 2% coupon.
The credit is rated MIG-1 by Moody’s and SP-1-plus by Standard & Poor’s.
The Virginia College Building Authority competitively sold $331 million of taxable and tax-exempt debt in several pieces.
A $105.1 million tax-exempt series was sold to Bank of America. The bonds mature from 2011 through 2027, with coupons ranging from 2% in 2011 to 3.5% in 2027. All the bonds were sold but not available. The bonds are callable at par in 2020.
A $225.9 million series was also sold to Bank of America Merrill Lynch, structured as both tax-exempts and taxable BABs.
Bonds maturing from 2011 through 2018 are tax-exempt, with coupons ranging from 2% in 2011 to 5% in 2018. All the bonds were sold but not available.
Bonds maturing from 2019 through 2025, with term bonds in 2030 and 2040, were structured as taxable BABs. Yields range from 3.75% in 2019, or 2.44% after the 35% federal subsidy, to 5.60% in 2040, or 3.64% after the subsidy, all priced at par.
The bonds were priced to yield between 105 and 230 basis points over the corresponding Treasury yields.
The credit is rated Aa1 by Moody’s, AA by Standard & Poor’s, and AA-plus by Fitch.
Barclays Capital priced $212.4 million of taxable BABs for the University of Michigan Regents.
The BABs mature from 2013 through 2025, with term bonds in 2031 and 2041. The bonds were priced to yield between 45 and 155 basis points over the corresponding Treasury yields.
The deal also contained a $7.6 million tax-exempt component, which matures in 2012, yielding 0.50% with a 5% coupon.
The credit is rated triple-A by Moody’s and Standard & Poor’s
In economic data released Wednesday, demand for durable goods climbed faster than economists estimated in September. Excluding transportation, durable goods orders decreased 0.8% for the month.
Economists polled by Thomson Reuters expected gains of 1.9% for all durable goods orders and 0.4% for orders excluding transportation.
New home sales rose 6.6% to a seasonally adjusted annual rate of 307,000 in September, the highest level since June.
It was the second consecutive monthly gain. Economists polled by Thomson Reuters expected 300,000 new home sales for the month.