Tax-exempts were mixed against a backdrop of Treasury market losses yesterday, while two new Battery Park City financings and recently priced deals dominated the action.
Gains made earlier in the week on hopes that the North American Free Trade Agreement would be approved were snuffed out, even though NAFTA made it through the House of Representatives on Wednesday.
Instead, bond prices dropped after it was reported that initial state unemployment insurance claims fell 20,000 to a seasonally adjusted 338,000 in the week ended Nov. 13.
The 30-year Treasury bond fell about 1/2 point after jobless claims were reported. Municipals fared better, dropping only 1/8 to 1/4 point on average, traders said. Treasury bonds dropped even lower after more signs of economic strength were seen in the Philly Fed report. The Philadelphia Federal Reserve's index of manufacturing activity rose to 22.4 in November from 15.1 in October, extending the improving trend.
Treasury bonds hit their lows later in the afternoon after the Commodities Research Bureau Index reached, the highest level in three years, traders said.
Municipal traders reported light to moderate secondary activity and by session's end, prices were decidedly mixed. They said bid-wanted flow was-moderate and dollar bond prices were 1/4 point lower, although bonds freed to trade from this week's deals managed some gains.
"Overall, there were more sellers than buyers," one trader said. "They're not feeling very confident right here."
In the debt futures market, the December municipal contract settled just off the low of the day, down 12/32 to 101.26. The contract posted a high of 102.06. The MOB spread narrowed to negative 460 from negative 472 on Wednesday.
Back in the cash market, in late secondary dollar bond trading, Chicago O'Hare MBIA 5s of 2018 were quoted at 5.62% bid, 5.59% offered; New York State Power Authority 5 1/4s of 2018 were quoted 96 3/4-7/8 to yield 5.49%; and Pittsburgh Water and Sewer FGIC 4 3/4s of 2016 were 5.45% bid-none.
Also, Florida State Board of Education 5 1/8s of 2022 were quoted at 94 1/2-3/4 to yield 5.50%; and Los Angeles DEWAP 5.40s of 2031 were 5.71% bid, 5.66% offered.
In follow-through business, Goldman, Sachs & Co. freed $674 million New York City general obligation bonds from syndicate restrictions. Late in the day, bonds due in 2012, 2013, and 2014 were quoted at 6.01% bid, 6% offered. They were originally reoffered to investors at 6.03%.
Elsewhere, Merrill Lynch & Co. freed $334 million Washington Metropolitan Area Transit Authority gross revenue transit refunding bonds to trade. The FGIC 5 1/4s of 2014 were quoted at 98-1/4 to yield 5.41 %, compared to the original reoffering yield of 5.432%.
CS First Boston lifted syndicate restrictions on $144 million Alaska Housing Finance Corp. insured mortgage program bonds. The 5.90s of 2033 were quoted at 98 7/8-99 to yield 5.97%. They were originally priced to yield 5.949%.
Morgan Stanley & Co. as senior manager tentatively priced $466 million Battery Park City Authority revenue refunding bonds.
The offering included $337 million senior revenue refunding bonds priced to yield from 4.80% in 2001 to 5.20% in 2005. A 2008 term, was priced with a coupon of 5% to yield 5.40%; a 2010 term was priced at par to yield 5.50%.
In addition, a 2013 term was priced as 5s to yield, 5;55%; a 2017 term, containing $85 million, was priced as 5 1/4s to yield 5.62%; a 2019 term was priced as 4 3/4s to yield 5.60%; and a 2020 term was priced at par to yield 5.70%.
The deal included $132 million junior revenue refunding bonds, comprising a 2022 term, containing $103 million, which was priced at par to yield 5.80%, and a 2023 term priced at par to yield 5.70%.
The bonds are rated A1 by Moody's Investors Service and AA by Standard & Poor's Corp.
Goldman, Sachs & Co. tentatively priced $262 million Housing New York Corp. senior revenue refunding bonds for the Battery Park City project.
The offering included serial bonds priced to yield from 4.95% in 2002 to 5.45% in 2008. A 2010 term was priced as 5 1/2s to yield 5.55%; a 2013 term was priced as 5s to yield 5.60%; a 2018 term, containing $85 million, was priced as 5s to yield 5.65%; and a 2020 term was priced as 5 1/2s to yield 5.70%.
The managers said they expected Moody's to rate the issue A1, and Standard & Poor's to rate it AA.