Issuers marched into the primary market yesterday with some of the year's last big refunding deals and secondary prices promptly retreated.
A slew of negotiated deals hit the decks as bonds began to back up after last week's impressive gains. Players said buyers had ducked out of the market after scooping up product last week, leaving the secondary in the doldruums and underwriters to guess at what investor demand remained.
"We had a tremendous week against the Treasury market last week and now we're backing up ahead of a big calendar," one trader said. "The customers aren't there and the Street will have to lug these deals through the year."
The same trader predicted that municipals would turn around after the new year as investors, packing cash from various Jan. 1 redemptions and payments, would need to put their money back to work.
But players could only mark bonds lower yesterday and a weak Treasury market offered no support. The economic calendar proved to be of no consequence to bond prices as retail sales increased 0.4% in November, in line with market expectations.
Traders reported light secondary action, as most of the focus was on new issues. Near the end of the lack-luster session, prices were quoted down 1/4 to 3/8 point on average. High-yield bond prices were quoted down 3/8 point, traders said.
In secondary dollar bond trading, San Jose 5s of 2020 were quoted at 5.46 bid, 5.40% offered; Chicago O'Hare MBIA 5s of 2018 were at 5.50% bid, 5.47% offered: Florida Board of Education 5.20s of 2023 were 5.48% bid, 5.44% offered.
Reflecting the dearth of buyers, The Blue List of dealer inventory up for sale jumped $101 million to $1.59 billion. The Bnd Buyer calculated 30-day visible supply at a still hefty $7.63 billion.
In the debt futures market, the March municipal contract settled down 8/32 to 102.10, after posting a low of 102.03 and a high of 102.20. The MOB spread narrowed to negative 391 from negative 403 on Monday as Treasury prices suffered from a mish-mash of troubles, including turmoil over Russian leadership, higher oil prices, the retail sales data, and some technical problems. The 30-year bond fell nearly one point to yield 6.29% near the end of New York trading.
New Deals
CS First Boston as senior manager priced $442 million revenue refunding bonds for the Georgia Municipal Electric Authority.
A source close to the deal noted buyers were indeed tougher to draw, whereas they were voracious last week.
"This was one the many deals this week that was a little tough to sell," the market source said.
Series CC serial bond yields were lowered by 10 basis points in 2000, raised by five in 2001 and 2002, and lowered by three in 2019. Series 1993D yields were cut by 10 basis points in 2000 and by 15 in 2005, while yields were raised by five in 2001 and 2002.
The final offering was made up of $281 million Series CC bonds priced to yield from 3.25% in 1995 to 5.30% in 2010. A 2013 term was priced with a coupon of 5.25% for a return of 5.30% and a 2019 term, containing $27 million, was priced as 4 3/4s to yield 5.372%. There were $52 million sixth crossover series bonds priced to yield from 4.65% in 2004 to 5.20% in 2008. Finally, there was $108 million Series 1993D bonds priced to yield from 3.25% in 1995 to 5% in 2006.
Series CC bonds from 1995 through 2008 are noncallable, as are the sixth crossover series and the Series 1993D bonds.
Series CC bonds from 2004 through 2006 are insured by the Municipal Bond Investors Assurance Corp., while the term bonds are insred by the AMBAC Indemnity Corp. Sixth crossover series bonds in 2004 are also MBIA-insured. The insured bonds are rated triple-A by Moody's Investors Service and Standard & Poor's Corp. Standard & Poor's, however, as placed the issue on Creditwatch with negative implications. The uninsured bonds are rated A1 by Moody's and AA-minus by Standard & Poor's.
A 13-member syndicate led by PaineWebber Inc. as senior manager priced, repriced, and restructured $416 million cort facilities lease revenue bonds for the New York State Dormitory Authority.
At the repricing, serial bond yields were cut by five basis points in 1999 and 2000, by two in 2013 and in 2016, and by one in 2023. A 2022 term was added to the scale.
The final scale was made up of serial bonds priced to yield from 4.70% in 1999 to 5.45% in 2007. A 2010 term maturity, containing $42 million of the loan, was priced with a coupon of 5.50% for a return of 5.629%; a 2013 term, with $49 million, was priced as 5 5/8s to yield 5.68%; a 2016 term, containing $57 million, was priced as 5 3/8s to yield 5.683%; and a 2021 term, containing $118 million, was priced as 5 1/4s to yield 5.684%.
In addition, a 2022 term, containing $28 million, was priced as 5.70s to yield 5.744%; and a 2023 term, with $29 million, was priced as 5 1/2s to yield 5.729%.
The bonds are rated Baal by Moody's and BBB-plus by Standard & Poor's Corp., and Fitch Investors Service.
Dillon, Read & Co. priced and repriced $204 million New York State Thruway Authority general revenue bonds.
At the repricing, serial bond yields were lowered from two to 10 basis points, while term bond yieds were lowered by about two basis points.
The final scale included serial bonds priced to yield from 2.60% in 1995 to 5.13% in 2009. A 2014 term was priced as 5s to yield 5.26% and a 2020 term, containing $52 million, was priced as 5s to yield 5.35%. There also was a 2024 term, totaling $50 million, with $25 million priced as convertible INFLOS and 1/2 25 million priced as variable rate demand notes.
Bonds from 1998 through 2020 are insured by MBIA. The 2024 term is backed by the Financial Guaranty Insurance Co. Insured bonds are rated triple-A by Moody's and Standard & Poor's. The 2024 term is also rated triple-A by Fitch.
Smith Barney Shearson priced and repriced $167 million Palm Beach County, Fla., solid waste industrial development revenue bonds for the Okeelanta Power Limited partnership project.
At the repricing, yields were lowered by five basis points in 2015 and 2021. The firm said it received the verbal award at the new price levels.
The final offering, subject to the federal alternative minimum tax, included a 2007 term priced at par to yield 6.375%; a 2009 term priced at par to yield 6.50%; a 2015 term priced at par to yield 6.70% and a 2021 term, containing $100 million, priced at par too yield 6.85%.
The bonds are not rated.
In light competitive action, J.P. Morgan Securities Inc. won $96 million Florida full faith and credit Dade County road refunding bonds with a true interest cost of 5.1286%.
The firm reported an unsold balance of $24 million late in the day.
