A Treasury rally failed to rouse municipals yesterday, which closed narrowly mixed on the day.
The credit markets started off the day cautiously after mixed economic data were released.
New orders for durable goods in July fell 3.8% to a seasonally adjusted $127.5 billion, while existing home sales surged 5.4% in July to a seasonally adjusted annual rate of 3.69 million units, the highest rate all year.
Municipal traders reported a passive tone and little action overall. Some traders reported more business, but in isolated situations.
After passing a quiet afternoon, the Treasury market rallied after the five-year note auction and the 30-year bond hit a new record low of 6.16%.
More liquid municipal bonds managed 1/8 point gains in response, traders said, while less liquid paper that had suffered earlier this week made back some ground.
For example, traders said a dealer bought some Massachusetts general obligation bonds in the secondary over the past two sessions, pushing the price back to the original reoffering level. Traders quoted the 5.20s of 2008 at 5.10%, where they had been 5.10%, less 3/8 to 3/8 point on Monday.
But overall, tax-exempts were quoted unchanged to 1/8 point higher in spots and traders termed the tone lethargic.
Secondary supply continued to rise yesterday, reflected by The Blue List of dealer inventory. The list rose $74 million to $1.79 billion.
In the debt futures market, the September municipal contract settled unchanged at 103.27. The MOB spread, however, widened to negative 463 from negative 452 Tuesday.
The high-grade sector got a test from a gilt-edged Georgia deal, sold competitively.
A First Boston Corp. group won the $93 million noncallable Georgia general obligation bonds with a net interest cost of 4.722%.
First Boston reported an unsold balance of about $35 million late in the session.
Serial bonds were reoffered to investors at yields ranging from 2.40% in 1994 to 5.10% in 2013. Bonds from 2006 through 2011 were not reoffered to investors.
The bonds are rated Aaa by Moody's Investors Service, AA-plus by Standard & Poor's Corp., and AAA by Fitch Investors Service.
In the negotiated sector, Bear, Stearns & Co. priced $389 million of New York State Metropolitan Transportation Authority transit and commuter facilities service contract bonds.
At the repricing, the amount was boosted from $275 million, and a 2016 term and a 2014 zero coupon bond maturity were added to the scale. Term bond yields were lowered by two basis points in 2016 and by four basis points in 2019. Zero coupon bond yields were lowered by five basis points.
The final offering included $283 million of noncallable transit facilities serial bonds priced to yield from 3.40% in 1995 to 5.55% in 2007. A 2016 term, containing $45 million, was priced as 5 5/8s to yield 5.73% and a 2019 term was priced as 4 3/4s to yield 5.69%. There also were noncallable zero coupon bonds priced to yield from 5.70% in 2008 to 5.85% in 2014. There were $68 million of commuter facilities bonds priced to yield from 3.40% in 1995 to 5.55% in 2007, 5.73% in 2016 and 5.69% in 2019. There also were noncallable zero coupon bonds priced to yield from 5.70% in 2008 to 5.85% in 2014.
The bonds are rated Baal by Moody's and BBB by Standard & Poor's.
Elsewhere, Smith Barney Shearson priced and repriced $200 million of Montana Higher Education Student Assistance Corp. student loan revenue bonds, subject to the federal alternative minimum tax.
Series A yields were lowered by five basis points from 2000 through 2005 and in 2012. Series B yields were also lowered five basis points, in 1997 and 1998 and from 2000 through 2005 and in 2012. Series C reoffering yields were lowered by 10 basis points.
The final offering included $73 million of Senior Series A bonds priced at par to yield from 3.40% in 1994 to 5.55% in 2005 and 5.75% for term bonds due in 2012. There was $100 million of Senior Series B bonds priced at par to yield from 3.40% in 1994 to 5.50% in 2005 and 5.70% for term bonds in 2012. Finally, there was $27 million of Subordinate Series C bonds priced at par to yield 5.70% in 2012. The bonds are rated Aaa by Moody's.
Prudential Securities Inc. tentatively priced $123 million of Massachusetts Health and Educational Facilities Authority revenue bonds for the Baystate Medical Center.
The offering included serial bonds priced to yield from 2.70% in 1994 to 5.30% in 2008. A 2012 term was priced as 5s to yield 5.45%; a 2015 term and a 2016 term were not formally reoffered, while a 2020 term was priced as 5s to yield 5.50%.
The bonds are insured by the Financial Guaranty Insurance Co. and rated triple-A by Moody', Standard & Poor's, and Fitch.
Traders reported light to moderate secondary trading, with mixed results overall.
In secondary dollar bond trading, Philadelphia Water CAP. Guaranty 51/2s of 2014 were quoted at 98 5/8-99 to yield 5.61%; Rhode Island Convention Center MBIA 5s of 2020 were quoted at 5.57% bid, 5.56% offered; and Michigan Building Authority AMBAC 5.30s of 2016 were quoted at 5.45% bid, less 1/2 less 3/8.
In short-term note trading, yields were unchanged to five basis points lower on the day.
In late action, California revenue anticipation notes were quoted offered at 2.75%, while New York State notes were offered at 2.70%.