Over $1 billion of new deals met with mixed results yesterday, while secondary prices fell for the second consecutive session.
New issues were generally priced cheaper than outstanding secondary bonds yesterday and traders adjusted prices of bonds in their inventories accordingly.
Municipals moved lower even though the Treasury market made gains, causing the MOB spread to widen.
By session's end traders said short-term bonds were mostly unchanged, but long bonds were quoted down 1/8 to 1/4 point on average, and as much as 1/2 point depending upon the name.
In the debt futures market, the March contract settled down 7/32 to 96.03. The MOB spread widened to negative 250 from negative 242 Monday.
The market has given up roughly 1/2 to 3/4 point this week after enjoying a bull market last week.
Bond prices have cheapened as more and more deals hit the primary. Traders attributed some of yesterday's losses to upcoming supply pressure from $1.6 billion of New Jersey refunding bonds, expected to be priced tomorrow.
The loan is expected to include uninsured serial bonds from 1996 through 2013.
There may be a detachable call option included, said Robert Lurie, director of public finance for the state.
"That decision will be made at the last minute," he said yesterday.
A detachable call option would give the purchaser of the call the right to the call the bonds, effectively creating noncallable debt. Looking further ahead to supply, approximately $6.06 billion of new bonds will be priced over the next 30-days, according to The Bond Buyer's calculations.
Dominating action, Bear, Stearns & Co. as senior manager priced and repriced $466 million of Orlando Utilities Commission water and electric revenue refunding bonds.
At the repricing, yields were lowered by 20 basis points in 1993, by 10 in 1994, by four in 2005, by three in 2009, and by five in 2010.
Yields in 1995 were raised by 10 basis points, while yields in 1996, 1998, and 1999 were raised by five basis points.
The final offering included noncallable serials priced to yield from 2.40% in 1993 to 6.05% in 2010.
The offering is rated Aa1 by Moody's Investors Service, AA by Standard & Poor's Corp., and AAA by Duff & Phelps Credit Rating Co.
In other action, a syndicate led by Lehman Brothers priced and repriced $278 million of New Jersey Housing Finance Agency housing revenue bonds.
At the repricing, yields were raised by five basis points from 1996 through 1998 by 10 basis points in 2002 and 2028.
The offering included serials priced at par to yield from 3% in 1993 to 5.25% in 1998. A 2002 term bond was priced at par to yield 6%, terms in 2004 and 2007 were not formally reoffered to investors, a 2014 term was priced at par to yield 6.60%, and a 2028 term was priced at par to yield 6.70&.
The bonds are rated A-plus by Standard & Poor's Corp.
Goldman, Sachs & Co. priced and repriced $140 million of hospital revenue refunding bonds through the Michigan State Finance Authority for St. John Hospital.
Yields were raised by five basis points in 2000, 2001, 2013 and 2016. Yields were lowered by five basis points in 2002, 2003, and 2004.
The offering included serial bonds priced to yield from 3.75% in 1994 to 5.90% in 2004. A 2008 term was priced as 6s to yield 6.22%, a 2013 term was priced as 6s to yield 6.30%, a 2014 term was priced as 6 1/4s to yield 6.30%, and a 2016 term was priced at an original issue discount as 5 3/4s to yield 6.30%.
The bonds are rated A1 by Moody's and A-plus by Standard & Poor's, except for bonds in 2002 through 2016, which are insured by the AMBAC Indemnity Corp. and are triple-A rated by both rating agencies.
Smith Barney, Harris Upham & Co. as senior manager priced $101 million of revenue and revenue refunding bonds for the Northern Municipal Power Agency of Minnesota.
The offering included $39 million of Series 1992 A bonds priced to yield from 3.60% in 1995 to 6% in 2008. About $52 million of Series 1992 B bonds were priced to yield from 3.60% in 1995 to 6.10% in 2012. A 2018 term, containing $46 million of the loan, was priced as 5 1/2s to yield 6.17%. Finally, there was $10 million of Series 1992 C bonds priced with a coupon of 6 1/8 to yield 6.20% in 2020.
The offering is insured by AMBAC and is rated triple-A by Moody's and Standard & Poor's.
Competitive New Deals
Activity was light compared to the negotiated sector, but $72 million of Mississippi state general obligation capital improvement bonds were won by a Merrill Lynch group with a true interest cost of 5.7834%.
The firm reported an unsold balance of approximately $26 million late in the session.
Serial bonds were reoffered to investors at yields ranging from 2.60% in 1993 to 6.05% in 2012.
The bonds are rated Aa by Moody's.
In other action, a First Boston Corp. group won $71 million of Washoe County, Nev., School District limited tax general obligation refunding bonds.
An unsold balance was not available late in the day.
Serial bonds were reoffered to investors at yields ranging from 2.80% in 1993 to 6.05% in 2006. A 2007 maturity was not formally reoffered.
The issue is insured by the Municipal Bond Investors Assurance Corp. and triple-A rated by Moody's and Standard & Poor's.
Traders reported numerous customer lists and broker bids-wanted circulating in the secondary.
Reflecting increased selling pressure, The Blue List of dealer inventory rose $82 million, to $1.69 billion.
In follow-through business, Merrill Lynch freed $379 million of Massachusetts Bay Transportation Authority general transportation system bonds from syndicate restrictions.
In late secondary trading, maximum term bonds, the 6.20s of 2016, were quoted at 98 7/8-99 to yield 6.29% on the bid side. The bonds were originally priced to yield 6.27%.
Goldman, Sachs & Co. as senior manager freed $169 million of United Nations Development Corp. refunding bonds from syndicate restrictions.
In late trading, the 6s of 2026 were quoted at 93 3/4-94 1/4 to yield 6.45%.
In secondary dollar bond trading, prices were quoted down 1/8 to 1/4 point on average.
Triborough Bridge and Tunnel Authority 6 1/8s of 2021 were quoted at 98 3/4-99 to yield 6.21%; Metropolitan Pier and Exposition 6 1/2s of 2027 were quoted at 99 1/8-1/4 to yield 6.56%; and Houston 6 3/8s of 2022 were quoted at 99 1/2-100 to yield 6.41%.
MBTA 6.10s of 2023 were quoted at 96 1/4-3/8 to yield 6.38%; Georgia MEAG 6 3/8s of 2016 were quoted at 99 5/8-7/8 to yield 6.40%; North Carolina Catawba 6 1/4s of 2013 were quoted at 98 3/4-99 1/4 to yield 6.36%; and Denver Airport AMT 6 3/4s of 2022 were quoted at 94 3/4-85 1/4 to yield 7.18%.
Short-term note yields were also higher on the day, rising five to 10 basis points on some securities, traders said.
In late trading, Los Angeles tax and revenue anticipation notes were quoted at 2.45% bid, 2.40% offered; New Jersey Trans were quoted at 2.35% bid, 2.30% offered; and Pennsylvania notes were quoted at 2.45%bid, 2.40% offered.