The municipal market was weaker Monday amid fairly light secondary-trading activity as it prepared for a heavy slate of new issuance in the primary.
“I’d say we’re somewhere between three and five basis points weaker overall,” a trader in Los Angeles said. “Fairly light [secondary] trading as we get ready for the onslaught of supply this week. That’s what everybody’s looking at right now — it’s all about the new issues.”
The Municipal Market Data triple-A scale yielded 2.48% in 10 years Monday, up five basis points from Friday’s 2.43%, while the 20-year scale edged up two basis points to 3.34% from Friday’s 3.32%. The scale for 30-year debt yielded 3.73%, one basis point higher than Friday’s 3.72%.
Monday’s triple-A muni scale in 10 years was at 96.4% of comparable Treasuries and 30-year munis were at 100.3%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 111.7% of the comparable London Interbank Offered Rate.
The Treasury market was mixed Monday.
The benchmark 10-year note finished at 2.49% after opening at 2.51%.
The 30-year bond was quoted near the end of the session at 3.72% after opening at 3.71%.
The two-year note finished at 0.42% after also opening at 0.42%.
The first full week of the fourth quarter gets under way with $13.13 billion of new, long-term volume, which is expected to perk up and caffeinate a thin and sleepy primary market, according to Ipreo LLC and The Bond Buyer.
The noticeably larger calendar — which includes at least four long-term deals of $1 billion or more — dwarfs the revised $9.85 billion that came to market last week, according to Thomson Reuters.
An additional $1 billion sale of tax and revenue anticipation notes from Pennsylvania is planned for pricing in the short-term competitive market on Tuesday.
Leading the new-issue market this week is a $1.9 billion sale of revenue debt by the California Department of Water Resources, scheduled for negotiated pricing by senior manager Bank of America Merrill Lynch.
The bonds, which mature from 2011 through 2019, will be priced for retail investors Wednesday before institutional pricing Thursday. They are rated Aa3 by Moody’s Investors Service, AA-minus by Standard & Poor’s, and AA by Fitch Ratings.
The Dormitory Authority of the State of New York is gearing up to bring $1.36 billion of personal income tax revenue debt to market in a four-pronged deal being led by M.R. Beal & Co. that hits the market Tuesday.
Series 2010E and F are both tax-exempt securities that were offered to retail investors beginning last Thursday and Friday during a two-day retail order period ahead of Monday’s institutional orders.
Series 2010G and H are both taxable and planned for pricing Tuesday — but only Series H is designated as Build America Bonds.
New York City, meanwhile, is on tap to sell two general obligation bond issues, one in the negotiated market and one in the competitive market.
The larger negotiated issue totals $1.1 billion, and consists of $650 million of taxable GO debt issued as BABs and $500 million of tax-exempt GO debt. They are slated for pricing Thursday by Bank of America Merrill and rated Aa2 by Moody’s and AA by Standard & Poor’s and Fitch.
The city will also sell $150 million of taxable GO debt in the competitive market Thursday, structured as serial bonds maturing from 2012 to 2019.
Illinois’ Metropolitan Pier and Exposition Authority is planning to price a $1.2 billion financing on behalf of the McCormick Place convention center project. The deal, to be priced by Morgan Stanley, consists of three series of 2010 bonds.
Series A is comprised of tax-exempt new-money bonds, Series B is tax-exempt refunding bonds, and Series C is taxable refunding bonds.
In other new-issue activity, the competitive market will see the arrival of nearly $1 billion of Georgia GO debt Tuesday.
The Georgia transaction carries three triple-A ratings, totals $974.9 million, and consists of five series of bonds.
The largest is $360.4 million of taxable, direct-pay BABs maturing from 2011 to 2030, followed by $321 million of GO tax-exempt refunding bonds structured to mature from 2012 to 2022.
Another $170.1 million will consist of tax-exempt GOs maturing from 2011 to 2020 and $94.6 million will include taxable recovery zone economic development bonds.
The final series consists of $28.7 million of taxable qualified school construction bonds slated to mature in 2026 and 2027.
In economic data released Monday, factory orders fell more than analysts expected in August, dropping 0.5% to post their third decline in four months. Economists expected a 0.3% drop.
Pending home sales grew less then economists expected in August, rising 4.3% to a level of 82.3, according to an index released Monday by the National Association of Realtors.
The gauge of signed deals for used homes rose a revised 4.5% to 78.9 in July.