The municipal market was slightly weaker yesterday following losses in the Treasury market.

"We're seeing some weakness now," a trader in New York said. "The Treasury has been off all day, and in the morning we weren't really following it, but now we've weakened a bit as well. I'd say we're about two basis points higher in yield."

The Treasury market showed losses yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.56%, finished at 3.57%. The yield on the two-year note was quoted near the end of the session at 1.87% after opening at 1.80%.

In economic data released yesterday, new factory orders for manufactured goods slumped 1.3% in February. The factory order decrease to $424.4 billion was larger than the 0.6% decrease projected by IFR Markets and came after a revised 2.3% decrease to $430.1 billion in January.

Excluding transportation, the level of all new manufacturing orders slid 1.8% to $361.3 billion in February, following a 0.3% drop in January to $368.1 billion. The decrease compared to a 0.3% increase projected by IFR.

In economic data for the remainder of the week, tomorrow's March nonfarm payrolls report is at the forefront. In other data, initial jobless claims for the week ended March 29, continuing jobless claims for the week ended March 22, and the March ISM non-manufacturing index will be released today.

Economists polled by IFR are predicting that 50,000 jobs were lost in March. They are also forecasting 366,000 initial jobless claims, 2.860 million continuing jobless claims, and a 49.0 reading for the ISM non-manufacturing index.

In the new-issue market yesterday, Morgan Stanley priced $617 million of school facilities construction bonds for the New Jersey Economic Development Authority in 10 series. The deal is converting auction-rate securities to fixed-rate bonds.

Bonds from two separate $34.2 million series mature from 2008 through 2015, with yields ranging from 2.35% in 2009 to 3.92% in 2016, all with 4% coupons. Bonds maturing in 2008 will be decided via sealed bid. Bonds from one $82.5 million series mature in 2029, yielding 4.12% with a 5% coupon. Bonds from a second $82.5 million series mature in 2029, yielding 4.22% with a 5% coupon. Bonds from a $49.3 million series mature from 2009 through 2012, with yields ranging from 2.35% with a 4% coupon in 2009 to 3.26% with a 5% coupon in 2012. Bonds from a $72 million series mature in 2020, yielding 4.12% with a 5% coupon. Bonds from two separate $59.4 million series mature from 2009 through 2015 with a term bond in 2022, with yields ranging from 2.65% with a 4% coupon in 2010 to 4.61% with a 4.5% coupon in 2022. Bonds maturing in 2009 will be decided via sealed bid. Bonds from a $77 million series mature in 2027, yielding 4.12% with a 5% coupon. And bonds from a $66.5 million series mature in 2032, yielding 4.22% with a 5% coupon.

All bonds are insured by Financial Security Assurance Inc. The underlying credit is rated A1 by Moody's Investors Service, AA-minus by Standard & Poor's, and A-plus by Fitch Ratings. Bonds from the two $59.4 million series are callable at par in 2018. All other bonds are not callable.

The authority last sold school facilities construction bonds in September 2007. Bear, Stearns & Co. priced that $300 million transaction, with bonds maturing from 2009 through 2027, with term bonds in 2032 and 2037. Yields range from 3.48% with a 4% coupon in 2009 to 4.64% with a 5% coupon in 2037. Bonds maturing from 2009 through 2032 are insured by FSA. Some bonds maturing in 2037 are insured by Ambac Assurance Corp. Another set of bonds maturing in 2037 came uninsured.

Among 5% coupon paper in the deal, bonds maturing in 2032 were widest to that day's Municipal Market Data triple-A yield curve, with yields 18 basis points over the curve. Bonds maturing in 2037 were tightest to the scale, with yields seven basis points over.

UBS Securities LLC priced $557.5 million of second-lien water revenue project and refunding bonds for Chicago. The bonds mature from 2009 through 2028, with term bonds in 2033 and 2038. Yields range from 2.10% with a 4% coupon in 2009 to 5.07% with a 5.25% coupon in 2038. Bonds maturing in 2009 and 2038 are uninsured. All remaining bonds are insured by FSA. The underlying credit is rated A1 by Moody's, AA-minus by Standard & Poor's, and AA by Fitch.

Merrill Lynch & Co. priced about $350 million of bonds for Vanderbilt University in Tennessee that will be used to refund outstanding commercial paper the university has had issued for it to fund its capital projects. Officials reported that the deal, which was the first for Vanderbilt since 1995, achieved a true interest rate cost of 5.595%.

University officials say they have no plans to issue more long term debt at this time, especially since the CP program that is in place allows the university to use bridge financings for transportation projects.

Lehman Brothers priced $323.6 million of medical center pooled revenue bonds for the Regents of the University of California. The bonds mature from 2009 through 2027, with yields ranging from 2.13% with a 3% coupon in 2009 to 5.00% priced at par in 2027. The bonds are callable at 101 in 2016, declining to par in 2017. The credit is rated Aa2 by Moody's and AA-minus by Standard & Poor's.

 

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