The steady flow of supply in the new-issue market continued yesterday, as the University of California Regents priced another of the week’s largest transactions with nearly $800 million of bonds, as secondary market trading was light and yields were flat to slightly elevated.

Barclays Capital priced $795.5 million of general revenue bonds for the University of California Regents in two series.

Bonds from the $736.7 million Series O mature from 2010 through 2029, with term bonds in 2034 and 2039. Yields range from 1.15% with a 2.5% coupon in 2010 to 5.57% with a 5.25% coupon in 2039. These bonds are callable at par in 2019.

Bonds from the $58.8 million Series P mature from 2010 through 2017, with yields ranging from 1.18% with a 2% coupon in 2010 to 3.57% with a 5% coupon in 2017. These bonds are not callable.

The credit is rated Aa1 by Moody’s Investors Service and AA by Standard & Poor’s.

Traders said tax-exempt yields in the secondary market were flat to higher by one basis point.

“We’ve gotten a good amount of supply in the primary this week, and today is obviously no exception,” a trader in Los Angeles said. “It seems like we’re handling it fairly well, though there is a bit of a weaker tone out there. Overall though, we’re fairly flat. And not a lot of trading going on in the secondary market either.”

The Treasury market showed gains yesterday. The yield on the benchmark 10-year Treasury note, which opened at 2.90%, was quoted near the end of the session at 2.87%. The yield on the two-year note was quoted near the end of the session at 1.00%, after opening at 1.01%. And the yield on the 30-year bond, which opened at 3.66%, was quoted near the end of the session at 3.62%.

As of Wednesday’s close, the triple-A scale in 10 years was at 114.0% of comparable Treasuries, according to Municipal Market Data. Additionally, 30-year munis were 133.1% of comparable Treasuries. Also, 30-year tax-exempt triple-A rated general obligation bonds were at 148.9% of the comparable London Interbank Offered Rate.

In other new-issue market activity, Merrill Lynch & Co. priced $121.3 million of tax-exempt and taxable public improvement bonds and notes for Frederick, Md., in three series.

Bonds from the $95.7 million tax-exempt series mature from 2011 through 2029, with a term bond in 2034. Yields range from 1.44% with a 3% coupon in 2011 to 5.01% with a 5% coupon in 2034. These bonds are callable at par in 2019.

The deal also contains a $12 million series of taxable public improvement bonds, maturing from 2010 through 2014 with term bonds in 2019 and 2029, and a $13.7 million series of taxable public improvement notes, which mature in 2013.

The credit is rated Aa3 by Moody’s and AA by Standard & Poor’s and Fitch Ratings.

Frost National Bank priced $96 million of utility system revenue improvement bonds for Corpus Christi, Tex.

The bonds mature from 2011 through 2027, with term bonds in 2029, 2033, and 2039. Yields range from 1.95% with a 2.5% coupon in 2011 to 5.52% with a 5.375% coupon in 2039.

The bonds, which are callable at par in 2018, are insured by Assured Guaranty Corp. The underlying credit is rated A2 by Moody’s and A-plus by Standard & Poor’s and Fitch.

Also, Morgan Keegan & Co. priced $82 million of bonds for Lubbock, Tex., in two series. Bonds from the smaller $23.2 million series mature from 2010 through 2029, with yields ranging from 1.77% with a 5% coupon in 2011 to 5.20% with a 5% coupon in 2029.

Bonds maturing in 2010 will be decided via sealed bid. Bonds from the larger $58.8 million series mature from 2010 through 2029, with yields ranging from 1.77% with a 4% coupon in 2011 to 5.20% with a 5% coupon in 2029. Bonds maturing in 2010 will be decided via sealed bid. All bonds are callable at par in 2019.

The credit is rated Aa3 by Moody’s, AA-plus by Standard & Poor’s, and AA by Fitch.

In economic data released yesterday, initial jobless claims for the week ended March 7 came in at 654,000, after a revised 645,000 the previous week. Economists polled by Thomson Reuters had predicted 645,000 initial jobless claims.

Continuing jobless claims came in at 5.317 million for the week ended Feb. 28, after a revised 5.124 million the prior week. Economists polled by Thomson Reuters had predicted 5.130 million continuing jobless claims.

Retail sales fell 0.1% in February, after a revised 1.8% rise the previous month. Economists polled by Thomson Reuters had predicted a 0.5% drop.

Excluding autos, retail sales climbed 0.7% in February, after a revised 1.6% uptick the previous month. Economists polled by Thomson Reuters had predicted a 0.2% decline.

Business inventories slid 1.1% to $1.440 billion following a revised 1.6% decline to $1.456 billion in December. Thomson Reuters had projected that business inventories would be off 1.0% in the month.

Today, February import prices and the preliminary March University of Michigan consumer sentiment index will be released.

Economists polled by Thomson Reuters are predicting an 0.8% decline in import prices, and a 55.0 Michigan sentiment index. 

 

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