Another wave of new issues washed over the market yesterday, and prices were mixed as traders waited nervously for today's retail sales data, which are likely to set the tone for the near term.
Over $3 billion of bonds were priced Tuesday, and more than $1.5 billion hit the market yesterday.
Jittery market players said that the Street is heavy with bonds and that if the retail sales number proves to be bad for bond prices -- meaning if it is an increase of considerably more than .7% -- the market could lose ground.
Many market observers have predicted a marked increase in demand by July 1, when as much as $10 billion of bonds could be called, but traders were still nervous about near-term price prospects.
"Issuers have been coming in as fast as they can because it's ideal to price bonds, but the funds are flush with money and it's been an orderly process so far," one Wall Street trader said late yesterday. "But the market has 10 toes hanging over the board right here and people are nervous. If the numbers are bad look to buy the MOB."
Prices are likely to move higher if retail sales are positive for bonds, and follow-through business on new deals should improve, traders said, but a rally would likely be limited due to supply.
Meanwhile, secondary prices were mixed yesterday as most market players focused on the primary sector.
In debt futures trading, the September municipal contract settled down 1/32 to 94.15. The September MOB spread narrowed to negative 149 from negative 153 Tuesday as municipals continued to outperform the Treasury market. The 30-year Treasury bond has dropped 5/8 points over the last two session's ahead of the retail sales report.
According to statistics compiled by The Bond Buyer, last year's total issuance for the month of June was a record $16.5 billion.
With yesterday's pricings, new issuance this June is already over $8 billion, pushing the market closer to a new record for the month. The Bond Buyer estimated 30-day visible supply at $4.1 billion.
The statistics also show, that if issuance is consistent, the primary sector will have priced $100 billion in debt sooner than any time in history.
Last year, the tax-exempt market hit the $100 billion mark in September. According to Securities Data Co./Bond Buyer, through Tuesday, $90.67 billion has already come to market in 1992.
Dominating new-issue activity yesterday, $250 million of New York State various purpose full faith and credit bonds were won by a syndicate led by Chemical Securities with a true interest cost of 5.842%.
The firm estimated an unsold balance of $70 million late in the session.
The offering included serial bonds only, priced to yield from 3.10% in 1993 to 6.50% in 2022.
The issue is rated A by Moody's Investors Service and A-minus by Standard & Poor's Corp.
In other competitive action, a syndicate led by Prudential Securities won $145 million Washington Suburban Sanitary District, Md., unlimited tax bonds, comprising $50 million water supply bonds; $40 million sewage disposal bonds; and $55 million general consolidated refunding bonds.
The firm reported an unsold balance of $61 million late yesterday.
The serials, won with a TIC of 6.0477%, were reoffered to investors at yields ranging from 3% in 1993 to 6.35% in 2012.
The issue is rated Aal by Moody's and AA by Standard & Poor's.
Major Negotiated Pricings
Bear, Stearns & Co. priced and repriced $196 million of Northern California Power Agency hydroelectric project No. 1 revenue bonds to lower the 2023 term bond yield by about one basis point.
Serial bonds were offered to investors at yields ranging from 3% in 1993 to 6.30% in 2009. A 2012 term maturity was priced as 6-1/4S to yield 6.42%, a 2018 term was priced as 6.30s but was not formally reoffered for sale, and a 2023 maximum term bond, containing $67 million of the loan, was priced as 6s to yield 6.436%.
The bonds are insured by the Municipal Bond Investors Assurance Corp. and are rated triple-A by both Moody's and Standard & Poor's.
Goldman, Sachs & Co. priced and repriced $130 million Arizona refunding certificates of participation to raise the 2004 yield by five basis points, and the 2010 term bond yield by about four basis points.
The offering included serials priced to yield from 3.50% in 1993 to 6.25% in 2004. A 2006 term was priced as 6-1/4S to yield 6.39% and a 2010 term, containing $53 million of the loan, was priced as 6-1/4S to yield 6.51%.
The issue is insured by AMBAC Indemnity Corp. and rated triple-A by both Moody's and Standard & Poor's.
PaineWebber Inc. priced and repriced $128 million of Orange County, Fla., Water Utilities System refunding revenue bonds.
Serial yields from 1993, 1994, and 1995 were lowered by five basis points, while serials from 2004 to 2007 were raised by five basis points. The 2012 term bond yield was raised by five basis points and the 2017 term bond yield was raised by six basis points.
The final pricing included serial bonds priced to yield from 3.20% in 1993 to 6.35% in 2008. A 2010 term maturity was priced as 5-1/2S to yield 6.422% and a 2017 term, containing $44 million of the loan, was priced as 6-1/4S to yield 6.49%.
The bonds are insured by AMBAC and triple-A rated by both Moody's and Standard & Poor's.
Grigsby, Brandford & Co. tentatively priced $108 million Los Angeles County Transportation Commission sales tax revenue refunding bonds.
The offering was made up of serial bonds priced to yield from 5.10% in 1997 to 6.10% in 2004.
The bonds are insured by Financial Guaranty Insurance Co. and triple-A rated by Moody's, Standard & Poor's, and Fitch Investors Service.
Scharff & Jones, a division of Morgan Keegan & Co., tentatively priced $94 million Louisiana Housing Finance Agency single-family mortgage revenue bonds.
The offering included $54 million series A bonds priced at par to yield 3.50%, due June 3, 1993, and $40 million series B bonds priced at par to yield 3.75%, also due June 3, 1993.
Moody's rated the issue MIG-1/VMIG-1.
In follow-through business, First Boston Corp. reported an unsold balance of $18 million from $104 million Commonwealth of Virginia full faith and credit bonds.
Lehman Brothers reported an unsold balance of $8 million from $125 million Baltimore County, Md., unlimited tax bonds.
Goldman, Sachs freed $166 million of Dallas, Tex., GO bonds from syndicate restrictions. In late trading, bonds, in 2001 were trading at the original list price, less 1/8. The bonds were originally offered to investors at 5.70%.
The Standard & Poor's Blue List of dealer inventory fell $76 million yesterday to $1.25 billion, but traders noted that there were not many blocks of bonds available in the secondary sector.
Market players said there were several $5 million to $10 million blocks of long insured revenue bonds out for the bid.
"The owners of those bonds were selling due to the lagging government market," the trader said. "But not too many other investors seem involved today."
Secondary dollar bond prices were mixed on the day. Greater Orlando Aviation Authority AMT insured 6-3/8S of 2021 were quoted at 97-5/8 to yield 6.60%, South Carolina PSA 6-5/8S of 2031 were quoted at 99-lock to yield 6.69%, and California 6-1/4S of 2012 were quoted at 97-3/8-5/8 to yield 6.48%.
Meanwhile, short-term trading was active yesterday and the tone was firm.
"There seems to be a bottomless wallet for short paper," one trader said. "Yields have been creeping lower for most of the week."
Late in the session, California Rans 3-1/4S were quoted at 3.35% bid, 3.30% offered; Los Angeles Trans 5-1/4S were quoted at 3.36% bid, 3.33% offered; Pennsylvania Tans 5S were quoted at 3.40% bid, 3.35% offered; and New York State Trans 3.65S were quoted at 2.95% bid, 2.90% offered.
PaineWebber Inc. priced $87 million of Minnesota Housing Finance Agency single-family mortgage bonds.
The offering included $47 million series E bonds, subject to the AMT, priced at par to yield 6.85% in 2024 and $4 million series F bonds, subject to the AMT, priced at par to yield 6.75% in 2012. There also was $37 million series G bonds, not subject to the AMT, priced at par to yield from 4.50% in 1994 to 6.50% in 2006. A 2011 super sinker was priced at par to yield 6.10%.
The managers said they expected Moody's and Standard & Poor's to rate the issue double-A.
Late yesterday, the New York State Metropolitan Transportation Authority announced that if the MTA's board approves, they will use all of the proceeds from the recently priced Triborough Bridge and Tunnel Authority special obligation bonds to defease all of the outstanding $352 million MTA 1986 Transit adjustable rate refunding obligations [1986 Transit ARROS] and certain maturities of 1987 Transit ARROS, according to a disclosure message from Dean Witter Reynolds Inc.
Except for securities to be redeemed to satisfy the regular sinking fund installments coming due on or before their respective due dates, all of the MTA's 1986 Transit ARROS will be redeemed on July 16, 1992.
According to the message, the $86 million 1987 Transit ARROS will be redeemed on July, 1st. Maturities to be redeemed have not yet been determined.