The municipal market was weaker yesterday after losses in the Treasury market.

Traders said tax-exempt yields were higher by three to five basis points.

"It's just in response to the Treasury market. In general, there's not really much going on," a trader in Los Angeles said. "I think everyone's already in weekend mode, since [today] is a half day, with a lot of people ducking out early [yesterday]. So I'm not really seeing much trading out there.

"Compared to what Treasuries are doing, we seem to be outperforming," the trader said. "Though, it's kind of yet to be determined. I think the real test is on Tuesday. If bonds start trading about five off, or more or less really, that's when we'll see where the market really is."

The Treasury market showed losses yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.80%, finished at 3.91%. The yield on the two-year note was quoted near the end of the session at 2.54%, after opening at 2.41%.

Trades reported by the Municipal Securities Rulemaking Board yesterday showed losses. Bonds from an interdealer trade of New York's Long Island Power Authority 5s of 2035 yielded 4.87%, up three basis points from where they were sold Wednesday. A dealer sold to a customer Illinois Finance Authority 6s of 2037 at 5.77%, up three basis points from where they traded Wednesday. Bonds from an interdealer trade of California 4.5s of 2026 yielded 4.60% up four basis points from where they traded Wednesday. Bonds from an interdealer trade of insured San Diego Public Facilities Financing Authority 5.25s of 2027 yielded 4.97%, three basis points higher than where they were sold Wednesday.

In economic data released yesterday, initial jobless claims for the week ended May 17 came in at 365,000, after a revised 374,000 the previous week. Economists polled by IFR Markets had predicted 370,000 initial jobless claims.

Continuing jobless claims for the week ended May 10 came in at 3.073 million, after a revised 3.073 million the previous week. Economists polled by IFR had predicted 3.065 million continuing jobless claims.

Today, April existing home sales will be released. Economists polled by IFR are predicting 4.850 million existing home sales.

In the new-issue market yesterday, California's Orange County Sanitation District competitively sold $78.2 million of refunding certificates of participation to Lehman Brothers, with a true interest cost of 2.71%. They mature from 2008 through 2013, with yields ranging from 1.85% with a 4% coupon in 2009 to 2.82% with a 4% coupon in 2012. Bonds maturing in 2008, 2010, 2011, and 2013 were not formally re-offered. The credit is rated Aa3 by Moody's Investors Service, and AAA by both Standard & Poor's and Fitch Ratings.

The North Texas Municipal Water District competitively sold $49.6 million of regional wastewater system revenue bonds to Depfa First Albany with a TIC of 4.33%. The bonds mature from 2009 through 2026, with a term bond in 2028. Yields range from 1.82% with a 4% coupon in 2009 to 4.43% with a 5% coupon in 2026. Bonds maturing in 2020, 2022, 2024, 2025, and 2028 were not formally re-offered. The bonds, which are callable at par in 2018, are rated Aa3 by Moody's and AA-plus by Standard & Poor's.

Wachovia Bank NA priced $43.2 million of revenue bonds for Georgia's South Regional Joint Development Authority. The bonds mature from 2010 through 2026, with term bonds in 2036 and 2039. Yields range from 2.47% with a 4% coupon in 2010 to 4.69% with a 4.5% coupon in 2039. The bonds, which are callable at par in 2018, are insured by Assured Guaranty Corp. The underlying credit is rated A1 by Moody's.

Minnesota's Independent School District No. 833 competitively sold $39 million of general obligation school building bonds to Harris NA with a TIC of 4.11%. The bonds mature from 2012 through 2027, with yields ranging from 3.00% with a 3.25% coupon in 2013 to 4.21% with a 4.125% coupon in 2024. Bonds maturing in 2012, 2014, and from 2025 through 2027 were not formally re-offered. The bonds, which are callable at par in 2018, are rated Aa3 by Moody's.

Lehman Brothers priced $39 million of single family mortgage bonds for the Colorado Housing and Finance Authority in two series. Bonds from a $15 million series subject to the alternative minimum tax mature in 2008, yielding 4.87% with a 5.75% coupon. Bonds from a $24 million series of non-AMT bonds mature in 2034, are priced at par to yield 5.00%. The bonds are callable at par in 2018. The credit is rated Aa2 by Moody's and AA by Standard & Poor's.

Wachovia priced $35 million of refunding certificates of participation for Charlotte, N.C. They mature from 2009 through 2027, with term bonds in 2033 and 2035. Yields range from 2.10% with a 4% coupon in 2009 to 4.72% with a 4.625% coupon in 2035. The COPs, which are callable at par in 2018, are rated Aa2 by Moody's, AA-plus by Standard & Poor's, and AA by Fitch.

Milwaukee County competitively sold $30.9 million of GO corporate-purpose bonds to Robert W. Baird & Co. with a TIC of 3.93%. The bonds mature from 2009 through 2023, with yields ranging from 2.32% with a 3.25% coupon in 2009 to 4.32% with a 4.25% coupon in 2023. The bonds, which are callable at par in 2017, are rated Aa3 by Moody's and AA by Standard & Poor's and Fitch.

 

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