The municipal market was quiet but weaker yesterday, as a number of large new issues came to the market, led by $700 million of Puerto Rico Electric Power Authority bonds.

“It’s quiet out there, but I’m actually seeing some people mark their bonds,” a trader in New York said. “I think overall, people had some inventory they weren’t quite ready to get rid of yet, but will eventually have to. I would say you’re three or four basis points weaker, probably a little more on the four basis point side.”

Nevertheless, the Treasury market showed gains yesterday. The yield on the benchmark 10-year Treasury note, which opened at 4.27%, finished at 4.21%. The yield on the two-year note was quoted near the end of the session at 2.91%, after opening at 3.04%.

In the new-issue market yesterday, JPMorgan priced $700.66 million in power revenue bonds for the Puerto Rico Electric Power Authority. Bonds mature from 2010 through 2025, with term bonds in 2028, 2033, and 2038. Yields range from 3.37% with a 5% coupon in 2010 to 5.34% with a 5.25% coupon in 2033. The bonds, which are callable at par in 2018, are rated A3 by Moody’s Investors Service, BBB-plus by Standard & Poor’s and A-minus by Fitch Ratings.

Morgan Stanley & Co. priced $389 million in general obligation bonds for Connecticut. Bonds mature from 2009 through 2028, with yields ranging from 2.54% with a 3% coupon in 2010 to 4.64% with a 4.6% coupon in 2028. Bonds maturing in 2009 will be decided via sealed bid. The bonds, which are callable at par in 2018, have credit ratings of Aa3 from Moody’s, and AA from Standard & Poor’s and Fitch.

Miami-Dade County competitively sold $271.6 million in transit system sales surtax revenue bonds to Merrill Lynch & Co., at a true interest cost of 4.89%. Bonds mature from 2009 through 2026, with term bonds in 2029, 2032, 2035, and 2038. Yields range from 1.85% on a 5% coupon in 2009 to par on a 5% coupon in 2035. Bonds maturing 2011, 2029, and 2038 were not re-offered. The bonds, which are callable at par in 2018, are insured by Financial Security Assurance Inc. and have underlying credit ratings of A1 from Moody’s, AA from Standard & Poor’s, and A-plus from Fitch.

Norfolk, Va. competitively sold $153.61 million in general obligation capital improvement bonds to Citi, at a TIC of 4.44%. Bonds mature from 2009 through 2028, with yields ranging from 3.17% on a 5% coupon in 2012 to 4.42% on a 5% coupon in 2022. Bonds maturing from 2009 through 2011 and 2024 through 2028 were not re-offered. The bonds, which are callable at par in 2017, were rated A1 by Moody’s, and AA by Standard & Poor’s and Fitch.

Goldman, Sachs & Co. repriced $144.74 million in revenue bonds for the Maryland Health and Higher Educational Facilities Authority, for the benefit of the John Hopkins Health System Obligated Group. Bonds mature in 2042, 2046 and 2048 with mandatory tenders on all bonds. Yields range from 3.65% at par in 2042 to 4.3% with a 5% coupon in 2048. The bonds have ratings of A1 from Moody’s, A-plus from Standard & Poor’s, and AA-minus from Fitch.

The University System of Maryland competitively sold $90 million in auxiliary facility and tuition revenue bonds to Goldman Sachs at a TIC of 4.32%. Bonds mature from 2009 through 2026, with a term bond in 2028. Yields range from 3.12% on a 4% coupon in 2012 to 4.616% on a 4.5% coupon in 2028. Bonds maturing from 2009 through 2011 were decided via sealed bid, and bonds maturing from 2023 through 2026 were not re-offered. The bonds, which are callable at par in 2018, have underlying credit ratings of Aa2 from Moody’s, AA-plus from Standard & Poor’s, and AA from Fitch.

Still to come this week, Florida’s Citizens Property Insurance Corp. is scheduled to come to market $1.5 billion to $2 billion of tax-exempt notes. Goldman Sachs is slated to price that deal today.

In economic data released yesterday, the producer price index rose 1.4%, after a 0.2% gain the previous month. Economists polled by IFR Markets had predicted a 1.0% increase.

The core PPI climbed 0.2%, after a 0.4% uptick the prior month. Economists polled by IFR Markets had predicted a 0.2% jump.

There were 975,000 housing starts in May, after a revised 1.008 million the previous month. Economists polled by IFR Markets had predicted 985,000 housing starts.

Building permits dipped to 969,000 in May, from a revised 982,000 the prior month. Economists polled by IFR Markets had predicted 960,000 building permits.

Also, industrial production in the nation was down 0.2% in May while capacity utilization fell to 79.4. The drop in production level followed a 0.7% decrease the previous month, while April capacity use was a revised 79.6. IFR Markets had forecast a 0.1% increase in production, and an 79.7% level for capacity utilization.

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