Dealers in tax-exempt bonds concentrated yesterday on a $700 million new-issue slate, while prices in the secondary market closed unchanged to slightly firmer in very light trading.
"It was mostly new issues," commented one dollar bond trader. "The secondary is firm, but there were only a couple of lists totaling about $100 million and they drew aggressive bids," he added.
The narrow trading range that has prevailed for most of this year has made life "boring and difficult," complained a trader of general obligation serial bonds. "We come in and watch the new issues get put away and there's very little left for us." he explained.
In yesterday's primary market, a $93.3 million California State University housing system revenue bond issue topped the competitive calendar and was awarded at a true interest cost of 6.95% to an account co-managed by J.P. Morgan Securities Inc. and Lehman Brothers with WR Lazard, Laidlaw & Mead Inc. the only member.
The offering attracted strong interest on the long end as $53.5 million insured bonds, due 2012-21, were placed with permanent investors at a 7% interest rate and an undisclosed price. The insured bnds -- backed by AMBAC Indemnity Corp. -- are rated triple-A by Moody's and Investors Service and Standard & Poor's Corp.
Yields on the uninsured bonds -- rated AA-minus by Standard & Poor's and A! by Moody's -- were scaled from 5.10% in 1992 to 6.95% in 2011. There was $23.9 million balance for this portion of the offering.
Over in the negotiated sector, investors gave a warm enough reception for the non-AMT portion of a $133.9 million Maryland Community Development Administration Department of Housing and Community Development single-family program bond offering to allow underwriters led by Merrill Lynch & Co. to shave serial yields by five basis points.
The $58.9 million non-AMT bonds were all offered at par with serial yields ranging from 5.25% in 1993 to 6.95% in 2006 and the term bonds returning 7.15% in 2011 and 7.25% in 2027. A 2019 term maturity was not formally re-offered.
The $75 million alternative minimum tax bonds were also priced at par with the serials scaled from 5.50% in 1993 to 7.20% in 2006 and the term bonds returning 7.35% in 2011 and 7.45% in 2032. There were no formal reofferings of the 2020 or 2027 term maturities.
Both series are rated Aa by Moody's.
A $93.5 million offering of New York State Dormitory Authority insured revenue bonds for Mount Sinai School of Medicine was also well received with serial yields trimmed five basis points and term bond returns shaved two to three basis points.
An underwriting account headed by Goldman, Sachs & Co. priced $39.2 million term bonds, due 2015, at 97 1/2 as 6 3/4s to yield 6.965%, and $18.8 million term bonds of 2009 at 98.462 as 6 3/4s to yield 6.90%. The serials were scaled from 4.75% in 1992 to 6.75% in 2005.
Underwriters reported that the entire issue was "heavily oversubscribed" with "substantial priority" in the 2015 term maturity.
The bonds are insured by MBIA Corp. and will be rated triple-A by Standard & Poor's and Moody's.
Returning to the competitive arena, a Prudential Securities Inc. account won $30 million Worcester, Mass., limited tax municipal purpose loan bonds and a Merrill Lynch & Co. group had the successful bid for $21.2 million Somerset County, N.J., unlimited tax bonds.
The Worcester issue was scaled out to 6.95% in 2007 and sold down to an $8.9 million balance. the issue is backed by MBIA Corp. and rated triple-A by Moody's and Standard & Poor's.
The Somerset issue was scaled out to 6.05% in 2001 and also showed an $8.9 million balance. Somerset County is rated triple-A by Standard & Poor's and Moody's on its own merits.
In Secondary dollar bond trading, New Jersey Turnpike Authority 7.20s, due 2018, closed unchanged at 103-103 1/4 to yield 6.64% to the par call in 1999 and 6.81% to the premium call in 1993.
Florida State Board of Education 7 1/4s of 2023 were slightly weaker on the bid at 102-103, where they returned 6.89% to the 2004 par call.
New York LGAC 7s of 2016 were 1/8 higher on the day at 95 7/8-96 3/8 to yield 7.32% to maturity.
Prerefunded bonds were slightly firmer. The market for issues with a 1995 call and a 9% coupon was around 5.82% bid, 5.75% offered. Issues with double-digit rates came slightly cheaper.
Note prices buckled as the funds were sellers. A trader said that investors were starting to buy direct because of the low rates of the funds.
New York March tax and revenue anticipation notes traded at one point in the low 5.50s, but came back to close around 5.45% bid, 5.40% offered. After some Los Angeles County notes came in for the bid, they settled later at 4.98% bid, 4.90% offered. The market for New Jersey notes was quoted in late trading at 5% bid, 4.90% offered.
Negotiated Pricings
Wisconsin Housing and Economic Development Authority, $77.6 million home ownership revenue bonds.
Ratings: Moody's Aa (expected); Standard & Poor's A-plus (expected).
All bonds are tentatively priced at par.
Yields on the $37.6 million series 1 non-AMT bonds are expected to run from 5.40% in 1993 to 6.95% in 2003, 7.05% in 2005, 7.15% in 2007, 7.25% in 2010, and 6.50% for the super sinkers of 2014.
The return on the $20 million series 2 alternative minimum tax variable rate securities (SAVRS) of 2022 has been tentatively set at 4.375%.
The yield for the $20 million series 3 alternative minimum tax residual interest bonds of 2022 has been tentatively set at 9.572%.
Lehman Brothers is senio manager for the underwriters. The official award is expected Friday.
New Castle County, Del., $56.3 million GO refunding bonds, series 1991.
Ratings: Moody's Aa; Standard & Poor's AA.
The issue was priced to yield from 4.40% on Oct. 15, 1991, to 6.65% in 2005.
Merrill Lynch & Co. and Butcher & Singer Inc. are co-managers. The account is closed and the verbal award has been received.
Wayne (Charter) County, Mich., $46 million airport revenue bonds (Detroit Metropolitan Wayne County Airport) subordinate lien, series 1991 A. The interest on the bonds is not subject to the federal alternative minimum tax for individuals.
Ratings: Moody's Aaa; Standard & Poor's AAA. MBIA insured.
The offering was comprised of $6.5 million term bonds of 2021 priced at par to yield 7%, $19 million term bonds of 2019 offered as 6 3/4 to yield 7%, $7.9 million term bonds of 2011 priced at 95 1/8 as 6 1/2s to yield 6.95%, and serials scaled from 5.50% in 1994 to 6.85% in 2006.
Smith Barney, Harris Upham & Co. is senior manager. The formal award is expected tomorrow.
Alabama Housing Finance Authority, $47.3 million single-family mortgage collateralized revenue refunding bonds, 1991 series C.
Ratings: Moody's Aaa (expected); Standard & Poor's AAA (expected).
All bonds were priced at par.
The offering was comprised of serials scaled from 4.75% in 1992 ti 6.55% in 2002, 6.95% in 2006, 6.375% for the super sinkers of 2011, and 7.125% for the term bonds of 2011.
The bonds were marketed through an account led by Goldman, Sachs & Co. The verbal award was received yesterday.
