More than $2 billion of new issues <
overwhelmed the municipal market yesterday with mixed results, while secondary prices also ended the day narrowly mixed.
The primary sector was crowded <
enough yesterday that senior manager Smith Barney, Harris Upham & Co. pulled a $250 million Clark County, Nev., deal after a preliminary pricing.
After a disappointing Tuesday <
session when prices dropped nearly 1/2, traders were looking to the results of yesterday's new deals for an indication of market strength.
But the results of many deals <
were unclear by session's end and many traders decided to wait for repricings.
"The market was overwhelmed <
by new issues, and the secondary shut down because people wanted to wait and evaluate their inventory compared to the new deal levels," one trader said. "The market will also be watching to see how the allotment process goes and whether buyers will get their bonds or go empty-handed to the secondary looking for some."
Meanwhile, the Treasury market <
bounced off its recent low, buoyed, in part, by news that a Wall Street Journal story reporting that the Fed will not ease soon may have been erroneous.
In the debt futures market, the <
June municipal contract settled up 3/32 to 95.07. Treasury gains outpaced the tax-exempt sector and the MOB spread widened to negative 151 from negative 145 the previous session.
In the primary sector, new issues <
were met with a mixed response, some faring better than others.
Leading the way, Morgan Stanley <
& Co. priced and then repriced and restructured $375 million of Austin, Tex., combined utility systems revenue refunding bonds.
Complete details were not available <
at press time, but a Morgan Stanley officer said that maturities were added to the zero coupon bond portion of the loan and the 2007 maturity was repriced as 12-1/2 at a significant discount.
The tentative pricing was available <
and included serial bonds tentatively priced to yield from 4.75% in 1994 to 6.40% in 2006. A 2014 term, containing $133 million of the loan, was priced as 5-3/4s to yield 6.50%. Capital appreciation bonds were priced to yield 6.70% in 2007, 6.75% in 2008, and 6.80% in 2009.
The issue is insured by Municipal <
Bond Investors Assurance Corp. and rated triple-A by both Moody's Investors Service and Standard & Poor's Corp.
Donaldson, Lufkin & Jenrette Securities <
Corp. priced and repriced $307 million of Rhode Island Depositors Economic Protection Corp. special obligation bonds.
Term bonds yields of 2010,2013, <
and 2022 were lowered by five to 7-1/2 basis points, while the yield on the 1993 maturity was raised by 75 basis points.
The final offering included serial <
bonds priced to yield from 4.50% in 1993 to 6.55% in 2007.
A 2012 term bond was priced at <
par as 6.55s; a 2013 term was priced at par as 6.90s; a 2019 term, containing $92 million of the loan, was priced at par as 6-5/8s to yield 6.74%; and a 2022 term was priced at par to yield 6.95%.
Maturities from 1993 to 2007 are <
insured by Financial Security Assurance and triple-A rated by Moody's and Standard & Poor's Corp. The 2012 term is insured by MBIA, and triple-A rated by both agencies. The 2013 and 2022 bonds are rated Baal by Moody's and A-minus by Standard & Poor's.
In other action, Goldman, Sachs <
& Co. priced and repriced $270 million of Detroit Water Supply System revenue and revenue refunding bonds, lowering the 1993 and 1994 maturities by 10 basis points.
The final pricing included $164 <
million of Series 1992 bonds priced to yield from 3.40% in 1993 to 6.45% in 2007. A 2012 term, containing $75 million of the loan, was priced as 6-1/4s to yield 6.54%.
Also included was $53 million of <
periodic auction reset securities that were not formally reoffered to investors and $53 million of inverse floating rate securities priced at par as 9.07s.
The bonds are insured by Financial <
Guaranty Insurance Co. and triple-A rated by Moody's, Standard & Poor's, and Fitch Investors Service.
Bear, Stearns & Co. priced and repriced <
$218 million of Florida Municipal Power Agency station 2 project revenue bonds to raise term bond yields by two basis points.
The final offering included serials <
priced to yield from 5.40% in 1998 to 6.35% in 2006. A 2012 term was priced as 6s to yield 6.49%, a 2020 term was priced as 6s to yield 6.54%, and a 2027 term, containing $89 million of the loan, was priced as 6s to yield 6.54%.
The issue is insured by AMBAC <
and triple-A rated by both Moody's and Standard & Poor's.
Smith Barney priced and repriced <
$149 million of Hillsborough County, Fla., Hospital Authority hospital revenue refunding bonds for the Tampa General Hospital project.
Yields from 1993 to 1999 were <
raised five to 10 basis points.
Serial bonds were priced to yield <
from 3.70% in 1993 to 6.30% in 2004. A 2013 term was priced as 6-3/8s to yield 6.65%.
The bonds are insured by FSA <
and carry triple-A ratings from both Moody's and Standard & Poor's.
Bear Stearns also priced $100 <
million of Illinois sales tax revenue bonds.
Serials were priced to yield from <
3.20% in 1993 to 6.40% in 2007. A 2013 term was priced to yield 6.50%, and a 2022 term was priced to yield 6.577%.
The issue is rated Aa by Moody's <
and AAA by Standard & Poor's.
In competitive action, J.P. Morgan <
Securities won $257 million of District of Columbia full faith and credit GO bonds with a true interest cost of 6.4164%.
The firm reported an unsold balance <
of $151.5 million late in the session.
The offering included serial <
bonds reoffered to investors at yields ranging from 3.25% in 1993 to 6.55% in 2010. A 2012 term, containing $42 million of the loan, was priced as 6.30s to yield 6.599%.
The issue is insured by MBIA and <
is triple-A rated by Moody's and Standard & Poor's, A-minus by Fitch.
In follow-through business, Stifel, <
Nicolaus & Co., senior manager for $608 million Oklahoma Turn-pike Authority bonds, freed the issue to trade. In late secondary action, the 6-1/8s of 2020 were quoted at 94-1/2-3/4 to yield approximately 6.55%. The bonds were originally reoffered to investors at 6.527%.
Secondary trading was light as <
most traders watched the primary sector.
Supply has increased, reflected <
by Standard & Poor's Blue List, which rose $105 million to $1.4 billion yesterday.
In secondary dollar bond trading, <
prices were mixed on the day. In late activity traders quoted New York State Power Authority 6-1/4s of 2023 at 96-5/8-7/8 to yield 6.50%; New Jersey Turnpike Authority 6-1/2s of 2016 were quoted at 99-7/8-100 to yield 6.51%, and South Carolina PSA 6-5/8s of 2031 were quoted at 98-5/8-7/8 to yield 6.72%. California GO 6-1/2s of 2012 were quoted at 97-1/8-3/8 to yield 6.76%, and New York City 7s of 2022 were quoted at 96-1/8-3/8 to yield 7.32%.
Market participants said that <
short-term securities held up well through yesterday's trading, and most issues were little changed.
Late in the day, California Rans <
3-1/4s were quoted at 3.62% bid, 3.57% offered; Los Angeles Trans 5s were quoted at 3.58% bid, 3.50% offered; Pennsylvania Tans 5-1/4s were quoted at 3.60% bid, 3.55% offered; and New York State Trans 3.65s were quoted at 3.32% bid, 3.30% offered.