Municipals were mixed in light trading yesterday as the Street took a chary stance, watching for the results of $1.7 billion of new issues and a weaker Treasury market.
The market opened with a firm tone, despite a failing Treasury market, and many traders reported an increasing bullish sentiment as secondary supply eased.
The Blue List of municipal bonds fell $47 million, to $994 million. The last time The Blue List fell below $1 billion was July 31, when it totaled $940 million.
But as new issues hit the market, some traders said they worried that underwriters would price other deals too aggressively and buyers would step away.
"You wonder if underwriters are going to get themselves into a hole," a trader said. "New issues seem like they're going okay, but the buyers are in control so people are cautions."
"People are wishing this market up," another trader said. "These deals, for the most part, are coming cheaper than comparable bonds in the secondary and they're still not a riot."
Those concerns seemed realized by session's end as the 30-year Treasury bond fell 1/2 point and nervousness spread through the Street.
"I've been here before," one trader said grimly late in the day. "They bring a bunch of deals cheap to the secondary and then Treasury bonds fall making secondary prices look even higher and you're stuck. "
But other market players said Treasury prices would hold and tax-exempts were narrowly mixed at the close. In the debt futures market, the December municipal contract settled down 7/32 to 97.30. The December MOB spread narrowed to negative 276 from negative 280 Tuesday.
Paine Webber Inc. as senior manager priced and repriced $418 million of Illinois "Build Illinois" sales tax revenue refunding bonds.
At the repricing , yields were lowered by five basis points for serial bonds from 1997 through 1999, and three basis points in 2009. Yields were raised by two basis points in 2014 and 2020, which contained $148 million of the loan.
The final reoffering included serial bonds priced to yield from 2.80% in 1993 to 5.90% in 2006. A 2009 term was priced as 6s, to yield 6.04%; a 2012 term was priced as 6s, to yield 6. 1 0%; a 2014 term was priced as 5 3/4s, to yield 6.225%; and a 2020 term, containing $98 million to the loan, was priced as 5 1/2s, to yield 6.202%.
The bonds are rated Aa by Moody's Investors Service and AAA by Standard & Poor's Corp.
In other action, a 13-member syndicate led by Pryor, McClendon, Counts & Co., priced, but did not reprice, $390 million of Denver City and County Airport System revenue bonds, subject to the federal alternative minimum tax.
The offering, the largest negotiated deal ever priced by a minority firm as senior manager, included serial bonds priced to yield 4.50% in 1994 to 6.70% in 2004. Serial bonds from 2001 to 2003 and in 2005 and 2006 were not formally reoffered to investors.
A 2012 term, containing $73 million of the loan, was priced as 6 3/4s, to yield 6.90%; a 2022 term, containing $185 million of the loan, was priced as 6 3/4s, to yield 6.95%; and a 2025 term, containing $72 million of the loan, was priced as 6 1/8s, to yield 6.90%.
The bonds are rated conditional Baal by Moody's and triple-B by Standard & Poor's and Fitch Investors Service.
A 15-member syndicate led by First Boston Corp. priced and repriced $217 million of Connecticut GOs.
At the repricing, yields were lowered by five basis points in 1993, 1995, 1997, and 2000. Yields were lowered by 10 basis points in 1998 and 1998.
The final reoffering scale included serial bonds piced to yield from 2.75% in 1993 to 6% in 2009.
The bonds are rated Aa by Moody's, AA-minus by Standard & Poor's and AA-plus Fitch.
A 13-member syndicate led by Goldman, Sachs & Co. as senior manager priced and repriced $204 million of Washington general obligation refunding bonds.
Yields were lowered by five basis points in 1993 through 1998 and by two basis points in 2009 and 2010.
The final offering included noncallable serial bonds priced to yield from 2.70% in 1993 to 5.98% in 2010.
The bonds are rated double-A by Moody's, Standard & Poor's, and Fitch.
McDonald & Company Securities Inc. priced. $200 million of Ohio Water Development Authority refunding bonds.
The firm said it would reprice the bonds, but details were not available before press time. However, market sources said that maximum yield term bonds in 2016 were tentatively priced to yield 6.15% and then the yield was lowered to 6.08% at the repricing.
Goldman Sachs priced and repriced $162 million of Massachusetts Health and Educational Facilities Authority revenue bonds as a derivative financing for the Beth Israel Hospital.
The final offering included $60 million fixed rate bonds priced to yield from 4.20% in 1996 to 5.75% in 2005 and 6.078% for term bonds in 2012. Also included were $52 million periodic auction reset securities and $52 million inverse floating securities, which were not formally reoffered to investors.
The bonds are insured by the AMBAC Indemnity Corp.. and triple-A rated by Moody's and Standard & Poor's.
Merrill Lynch & Co. priced and repriced $140 million of Georgia Baptist Medical Center revenue and revenue refunding bonds.
Yields were lowered by five to as much as 10 basis points on serial bonds and five basis points for term bonds.
The final offering included $95 million of Fulco Hospital Authority revenue bonds, $43 million of Fulco Hospital Authority refunding revenue bonds, and $2 million of Dekalb Private Hospital Authority refunding revenue bonds.
Serial bonds, were priced to yield from 3.15% in 1993 to 6.45% in 2007. A 2013 term was priced as 6 1/4s, to yield 6.487%; and a 2022 term was priced as 6 3/8s, to yield 6.55%. The issue is rated A by Moody's and Fitch.
Traders reported a quiet session, but some blocks of bonds traded, including $9 million of Denver GO 5 3/4s of 2006 and $4 million of Los Angeles Department of Water and Power 6s of 2032, which were said to have traded around 6.16%.
In other secondary dollar bond trading, prices were up as much as 1/4 point while other bonds lost 1/4 point.
In late trading, Clark County, Nev. AMBAC 6s of 2022 were quoted at 97 1/4-1/2, to yield 6.20%; Chicago GO AMBAC 5 7/8s of 2022 were quoted at 95 3/8-5/8, to yield 6.21 %; and Puerto Rico GO 6s of 2014 were quoted at 97 1/8-3/8, to yield 6.24%.
Florida Board of Education 2022 were quoted at 98-1/2, to yield 6.14%; Los Angeles Department of Water and Power 6s of 2032 were quoted at 97 1/2-98, to yield 6.16%; and New York City Water Authority 6s of 2017 were quoted at 95 7/8-96 1/8, to yield 6.33%.
In short-term note trading, yields were unchanged to five basis points higher in spots, traders said.
In late action, Los Angeles Trans were quoted at 2.90% bid, 2.85% offered; Texas Trans were quoted at 2.90% bid, 2.85% offered; and Wisconsin notes were quoted at 2.90% bid, 2.85% offered. New York State Trans were quoted at 2.90% bid, 2.85% offered.
Ohio Water Bonds
The Ohio Water Development Authority said it plans to market $529 million of revenue refunding bonds.
Authority officials did not name a price date, but market sources said they expected Goldman Sachs, lead manager of the deal, to price the issue next week.