It was business as usual in the tax-exempt market yesterday -- another $1 billion plus new-issue slate and a secondary market that closed little changed in very light, dealer trading.
While traders continued to complain of boredom and a lack of bonds to trade, underwriters were again kept busy with another formidable calendar. And investors seemed to like what they saw, as they gave the issues another warm welcome.
An employee at the U.S. Treasury telephoned The Bond Buyer yesterday inquiring as to why municipal bonds have performed better than governments since the end of March. He said he was told that demand for tax-exempts was even greater than the record first-half supply and found it hard to believe. But market participants confirmed it again yesterday with one source marvelling at the market's ability to absorb the heavy new-issue supply.
A $250 million offering of Puerto Rico Electric Power Authority topped the negotiated calendar and a strong reception for the term bonds, due 2021, allowed under-writers to boost the size of the issue from the $200 million offered at the preliminary pricing in the morning and at the same time reduce serial yields five basis points and trim term bond returns two basis points.
The final pricing included $162.6 million term bonds of 2021 offered at 97 1/2 as 7s to yield 7.20% and $33.4 million term bonds of 2011 offered at 98 5/8 as 7s to yield 7.129%. Serial returns ranged from 5.20% in 1992 to 7% in 2006.
The bonds, rated A-minus by Standard & Poor's Corp. and Baal by Moody's, reached the market through an underwriting account led by Lehman Brothers.
In the competitive market, a BT Securities Corp. account won $195 million Minnesota full faith and credit bonds in a close contest with a true interest cost of 6.548%. A Prudential Securities Inc. group was only a basis point behind with a TIC of 6.557%.
Reoffering yields ran from 4.60% in 1992 to 6.30% in 2001, 6.70% in 2006, and 6.80% in 2011. The issue sold down to a $56 million balance.
Minnesota's GO bonds are rated Aa by Moody's.
Returning to the negotiated sector, a Chemical Securities Inc. group began marketing $215 million Jefferson Sales Tax District, La., special sales tax revenue refunding and revenue bonds.
The $106 milion term bonds of 2006 were tentatively priced at 97 3/4 as 6 3/4s to yield 6.99%. The serial bonds were tentatively priced to yield from 5% in 1992 to 6.55 % in 2000.
The issue will be backed by Financial Guaranty Insurance Co. and is rated triple-A by Moody's and Standard & Poor's.
In another negotiated transaction, an account headed by Merrill Lynch & Co. tentatively priced $123.7 million health facilities revenue bonds for the Christian Health System.
Serial yields are expected to run as high as 6.65% in 2003 with term bonds reaching 7.05% in 2021. Some term bond yields are as high as 7.30% in 2021 because of special option redemption features.
The bonds are rated triple-A by Standard & Poor's and Moody's because of backing by FGIC>
Back in the competitive market, a Wachovia Bank & Trust Co. account reported a $3.4 million balance for $40.7 million Charlotte, N.C., triple-A unlimited tax bonds. Reoffering yields ranged from 4.90% in 1993 to to 6.70% in 2012.
Negotiated Pricings
Nebraska Investment Finance Authority, $110 million single-family mortage revenue bonds [GNMA mortgage-backed securities program].
Ratings: Moody's Aaa; Standard & Poor's AAA.
All bonds were reoffered at par.
Yields on the $39.3 million series D alternative minimum tax bonds will run from 5.20% in 1993 to 6.85% in 2006 with the $15 million term bonds of 2014 returning 7%.
The $13.3 million non-AMT series C super yields 6.50% in 2014.
There was no formal reofferings for the $28.7 million series A SAVRS or the $28.7 million series B RIBs.
The bonds were marketed through a Lehman Brothers account. The written award is expected tomorrow.
Central Lake County Joint Action Water Agency, Ill., $41 million water revenue bonds, series 1991.
Ratings: Moody's Aaa; Standard & Poor's AAA. MBIA insured.
The current interest bonds are comprised of $21.7 million term bonds priced at 98.766 as 7s to yield 7.10% and serials yielding from 5.90% in 1996 to 6.25% in 1999.
The capital appreciation bonds were offered at yields ranging from 6.70% in 2000 to 7.15% in 2013.
The bonds were through an account co-managed by Smith Barney, Harris Upham & Co. and William Blair & Co. The verbal award was received yesterday.
Arkansas Student Loan Authority, $24.5 million student loan revenue bonds, series 1991.
Ratings: Moody's A.
The serial bonds have been tentatively priced at par to yield from 4.75% on 1991 to 6.40% in 1997. There will be no formal reoffering of the $4.6 million term bonds of 2002.
The issue is being negotiated by a Smith Barney, Harris Upham & Co. account. The formal award is expected July 24.
