Municipal bonds ended 5/8 to 3/4 point higher in spots on Tuesday ahead of yesterday's market closings to honor the late president Richard M. Nixon.
"It's up, but you get the impression some guys have already bolted," one trader said Tuesday afternoon.
Dollar bonds ended up 5/8 point, while yields,on high-grade issues fell by seven basis points overall.
Helping municipals higher was "a very aggressive bid" for new issues and the government market's ability to hold its own than-expected consumer confidence report, a municipal analyst said.
Consumer confidence in April climbed to, 91.7% from 86.7% in March.
A trader said the municipal cash market opened strong and held its ground despite dips in the Treasury market and the municipal futures contract. Both later rallied to finish higher.
The 30-year Treasury bond ended Tuesday's June MOB spread was negative 433, compared to negative 442 on Monday. Dollar bonds had moved up 1/2 point by noon, and added "a cautious 1/2" later in the day as participants kept an eye out for today's durable goods report, which have been switched from yesterday, and first quarter gross domestic product report.
A trader Tuesday said some of the bargains the market once offered appeared to be dwindling.
"I would have to say bargains are drying up a little bit," he said. Discount bonds which had been cheap a week to two weeks ago, "are starting to tighten up some." he said. Their popularity has fallen off because of difficulty over the market discount rule.
The trader attributed the market's renewed strength in part to "lack of supply."
In addition,"I think you are getting a lot more believers," he said, adding that believers hailed from both retail and trading ranks.
According to Securities Data Co., April volume through Monday was $7.44 billion. Anticipated sales for this week are $3.83 billion, which includes 26 issues on the negotiated calendar totaling $1.61 billion listed as day-to-day.
That would result in new-issue volume of $11.27 billion for April - the lowest figure for any month since March 199 1, when 11.24 billion was sold. In April 1993, $22.18 billion was sold.
"I think our market looks pretty good to me right now," said Joe Deane, a managing director and portfolio manager of the Smith Barney Shearson Managed Municipals Fund. Deane cited "a good base of support" especially from individual investors.
In negotiated action Tuesday, a Lehman Brothers group priced and repriced $356 million Pennsylvania Industrial Development Authority economic development revenue bonds.
The AMBAC-insured offering contained serial bonds priced to yield from 3.20% in 1995 to 5.85% in 2009. A 2012 term, containing $46.5 million, was priced as 6s to yield 6.09%.
The serial bonds are noncallable, while the term bonds are callable beginning Jan. 1, 2004, at 102 and declining to par in 2006.
At the repricing, yields were lowered anywhere from 2.5 to five basis points.
"It was a good day for the good guys," a source familiar with the Pennslyvania. offering said, adding that the account has been closed. The deal drew interest from bond funds, investment advisers and trust departments.
"It was pretty broad based," he said.
A PaineWebber Inc. group priced and repriced $218 million of Hillsborough Co., Fla., School Board certificates of participation, series 1994. The MBIA-insured offering contained serial bonds priced to yield from 4.25% in 1996 to 6% in 2009. A 2011 term, containing $45 million, was priced as 6s to yield 6.10%. A 2014 term, containing $34 million, was priced as 6s to yield 6.15%.
At the repricing, yields on both term bonds were reduced by five basis points, a source familiar with the deal said.
Also Tuesday, a Merrill Lynch & Co. group priced and repriced $131 million of New York State Medical Care Facilities Finance Agency hospital and nursing home FHA-insured mortgage revenue bonds. The series A bonds are for St. Vincent's Medical Center and Staten Island University Hospital.
One trader said the offering went "very well."
"That [deal] was priced to sell and it did," he said.
The offering contained serial bonds priced to yield from 2.95% in 1994 to 5.95% in 2009. A 2014, containing $48 million, was priced as 6.20s to yield 6.168%%. A 2021 term, containing $41 million, was priced as 6.20s to yield 6.296%. A 2027 term, containing $16.2 million, was priced as 61/4s to yield, 6.322%. The bonds are callable beginning Feb. 15, 2004 at 102, declining to par in 2006.
At the repricing, yields on the serial bonds were lowered by 5 to 10 basis points. The yield on the 2014 maturity was lowered by about eight basis points, the yield on the 2021 maturity was lowered by four, and the yield on the 2027 maturity was lowered by five basis points.
In competitive action Tuesday, a Lehman Brothers group won an issue of $300 million Washington State general obligation various purpose bonds with a true interest cost of 5.86703%.
The offering contained serial bonds priced to yield from 3.40% in 1995 to 6.10% in 2019. The bonds are callable beginning May 1, 2004 at par. Moody's Investors Service, Standard & Poor's Corp., and Fitch Investors Service rate the bonds AA.
In other news, future supply slid lower on Tuesday while inventories climbed over the $1.5 billion barrier.
The Bond Buyer's 30-day visible supply fell $265 million to $5.36 billion from $5.63 billion on Monday. Negotiated forward supply fell $217 million to $3.17 billion from $3.39 billion.
Standard & Poor's Corp.'s The Blue List rose $12 million, to $1.5 billion, its first trip over that mark in a dozen days. There has not been a longer streak under $1.5 billion the approximation for a 60-day secondary supply - since the beginning of 1993, when dealer inventories were under $1.5 billion from the Jan. 1 through March 9.