Issuers loaded about $2 billion more in new deals on the market yesterday, netting mixed results and pushing secondary prices lower.
The market opened narrowly mixed after some signs of economic strength were reported. U.S. industrial production surged 0.9% in November, led by sharp increases in the output of motor vehicles and parts, the Federal Reserve reported. Total industrial capacity utilizaiton, meanwhile, jumped 0.6-percentage point in November, to 83.0% from 82.4%, as auto producers stepped up production for the second straight month.
The economic indicators were quickly forgotten, however, as new issues grabbed center stage. Prices gradually headed lower in very light action in response to the new pricings, topped by $755 million New York State Med Care bonds.
The new offerings met with mostly tepid investor demand, even though prices were generally cheap to outstanding bonds, players said. The rest of the market declined in response, even though secondary trading was light.
By session's end, cash prices were quoted down 1/4 point on average.
In secondary dollar bond trading, Chicago People's Gas AMT 5 3/4s of 2023 were quoted at 99 1/2-97 to yield 5.78%; San Jose 5s of 2020 were at 5.45% bid, 5.42% offered; and Orange and Orlando FGIC 5 1/8s of 2020 were 5.44% bid, 5.39% offered.
Also, Chicago O'Hare MBIA 5s of 2018 were quoted at 5.49% bid, 5.46% offered, and Florida Board of Education 5.20s of 2023 were quoted 5.45% bid, 5.43% offered.
The Blue List of dealer inventory continued to move higher as buyers turned away from the market, posting an $87.6 million rise yesterday, to $1.68 billio.
In the debt futures market, the March municipal contract settled down 1/32 at 102.09. The contract posted a high of 102.19 and a low of 102.08. The MOB spread narrowed to negative 388 from negative 391 on Tuesday.
New Deals
Morgan Stanley & Co., as senior manager, priced, repriced and restructured $756 million New York State Medical Care Facilities Finance Agency Mental Health Services Facilities improvement revenue refunding bonds.
At the repricing, serial bond yields were cut by five basis points in 1999, from 2001 through 2003, in 2007 and 2021. Yields were lowered by about three basis points on bonds due in 2019. A 2008 maturity was added to the scale and a 2014 term replaced a 2013 maturity.
The final offering included serial bonds priced to yield from 4.70% in 1999 to 5.57% in 2008. A 2014 term, containing $174 million, was priced with a coupon of 5.375% for a return of 5.70%; a 2019 term, containing $211 million, was priced with a coupon of 5.25% to yield 5.72%; and a 2021 term, containing $52 million, was priced as 5 1/4s to return 5.45%.
Bonds in 2000, 2005, 2006, and 2021 are backed by Financial Security Assurance Inc. insurance.
The insured bonds are rated triple-A by Moody's Investors Service and Standard & Poor's Corp. The remaining securities are rated Baa1 by Moody's and BBB-plus by Standard & Poor's.
WR Lazard, Laidlaw & Mead Inc. as senior manager tentatively priced $423 million District of Columbia general obligation refunding bonds.
The offering included $141 million Series 1994A-1 bonds priced to yield from 3.45% in 1995 to 5.40% in 2011. There were $64 million Series 1994A-2 bonds priced to yield from 3.45% in 1995 to 5.05% in 2005. Finally, there was $218 million Series 1994A-3 bonds priced to yield from 3.75% in 1995 to 5.70% in 2007.
The offering is non-callable.
The Series 1994A-1 bonds are insured by the Municipal Bond Investors Assurance Corp. and Series 1994A-2 are insured by the AMBAC Indemnity Corp. The insured bonds are rated triple-A by Moody's and Standard & Poor's, while the managers said they expected Moody's to rate the remaining bonds Baa. Standard & Poor's rated the uninsured bonds A-minus.
A 19-member syndicate led by Merrill Lynch & Co. priced, repriced, and restructured $420 million Dade County Fla., Water and Sewer System revenue refunding bonds.
At the repricing, serial bond yields were lowered by five basis points from 1996 through 2000 and by five basis points on bonds due in 2013. A 2012 term were eliminated.
The final scale included serial bonds priced to yield from 3.20% in 1995 to 5.25% in 2009. A 2013 term, containing $115 million, was priced as 5s to yield 5.35%.
The bonds are insured by the Financial Guaranty Insurance Co. and rated triple-A by Moody's, Standard & Poor's, and Fitch Investors Service.
Goldman, Sachs, & Co. priced $146 million Wisconsin Housing and Economic Development Authority housing revenue bonds.
The firm said it received the verbal award at the origial price levels.
Serials were priced at par to yield from 3% in 1994 to 5.30% in 2005. A 2013 term was priced at par to yield 5.80% and a 2019 term was priced at par to yield 5.875%.
The bonds are rated A1 by Moody's and A by Standard & Poor's.
Goldman also priced and repriced $127 million Michigan State Hospital Finance Authority hospital revenue and refunding bonds for the Detroit Medical Center Obligation Group.
At the repricing, serial bond yields were raised by 10 basis points in 2002 and 2003.
The final scale included serial bonds priced to yield from 4.90% in 2001 to 5.40% in 2008. A 2013 term was priced as 5 1/2S to yield 5.80%, and a 2023 term, containing $77 million, was priced as 5 1/2S to yield 5.90%.
Bonds ranging from 2004 through 2008 are insured by AMBAC and rated triple-A by Moody's and Standard & Poor's. The remaining bonds are rated A by Moody's and A-minus by Standard & Poor's.
