Prices were mixed with spots of weakness in light trading yesterday as the market walted for Friday's employment report and the long holiday weekend.
Sellers dominated a dull session, and traders attributed the action to end of quarter position squaring and caution ahead of some expectation of upward revisions to the employment numbers.
The treasury market also took a cautious step backward ahead of Friday's employment report, with the long bond posting 1/2 point losses to yield 6.70% by mid-session.
But government prices drifted back later in the afternoon and the long bond was quoted unchanged to yield 6.66% near the end of New York trading.
Municipal prices closed unchanged. while dollar bonds were quoted 1/8 to 1/4 point weaker, traders said. High-grade bond yields were said to be unchanged on the day.
In the debt futures market, the September contract settled down 102.06. The September MOB spread widened to negative 376 from negative 374 Tuesday.
The market paid no heed to the Chicagoland Business Barometer. The index increased to 53.9% in June on a seasonally adjusted basis from 53.1% in May, the Purchasing Management Association of Chicago said.
An index reading below 50% signals a slowing economy, while a level above 50% suggests expansion.
Just over $500 million of new issues were priced yesterday and market players reported a slowdown in demand that corresponded with the market's overall stall.
Market players still expect increased demand from July 1 bond calls and various payments to correspond with shrinking supply.
The Bond Buyer calculated 30-day visible supply at $3.57 billion, down $1.05 billion. The visible supply has not been that low since Feb. 10, when it was $3.28 billion.
In short-term note pricing yesterday, Bear, Stearns & Co. priced and repriced $350 million non-callable tax and revenue anticipation notes for Philadelphia, Pa.
At the repricing, yields were lowered by five basis points.
The final offering included $100 million Series A notes priced with a coupon of 3.25% to yield 2.75%; $50 million Series B notes priced as 3 1/4s to yield 2.75%: $100 million Series C notes priced as 31/4s to yield 2.70%; and $100 million Series D notes priced as 3 1/4s to yield 2.75%.
The Trans are all due June 15, 1994.
Series A notes were backed by a letter of credit from Canadian Imperial Bank of Commerce, Series B were backed by an LOC from Corestates Bank, Series C were backed by an LOC provided by Morgan Guaranty, and Series D notes were backed by an LOC by PNC Bank.
The notes are rated MIG-1 by Moody's, SP-1-plus by Standard & Poor's, and F-1-plus by Fitch, the rating agencies' highest short-term tax-exempt ratings.
In the long-term sector, Pryor, McClendon, Counts & Co. priced and repriced $150 million New York City Transit Authority refunding revenue bonds.
The offering is the largest MTA bond deal ever managed by a minority-owned firm, according to an MTA release.
The bonds were priced five to 15 basis points cheaper than yesterday's generic insured scale on the short end and right on the scale for longer bonds.
At the repricing, yields in 2018 were lowered by about two basis points and some zero coupon bond yields were lowered by five basis points.
The final offering included serial bonds priced to yield from 4.25% in 1998 to 5.30% in 2007. A 2018 term, containing $46 million of the loan, was priced as 5.40s to yield 5.53% and a 2020 term, containing $46 million, was priced as 5 1/4s to yield 5.60%.
The 2018 term bonds are noncallable.
There also were non-callable capital appreciation bonds priced to yield from 5.50% in 2008 to 5.65% in 2013.
The offering is backed by Financial Security Assurance Inc. and rated triple-a by Moody's and Standard & Poor's.
Several market sources close to the deal noted that some customers backed away because the offering was FSA-insured.
They cited uncertainty concerning the fate of FSA after US West announced it will sell the bond insurer late last week. FSA said Monday that it was setting aside loss reserves of $63 million for three troubled commercial real estate transactions in addition to $47.6 million already set aside.
"There are concerns about the credit itself, but we also have customers who tell us they won't touch it because of FSA," said one market source close to the deal.
One fund buyer of New York paper acknowledged that some buyers may have refused to buy the FSA-backed bonds, but added there was still plenty of demand for the issue.
A Pryor McClendon underwriter said that buyers not interested in the issue did not cite concerns about FSA.
In a statement. Sean McCarthy, managing director and head of FSA's financial guaranty department, said, "We are pleased with the execution [by Pryor, McClendon) on the transaction. We have been speaking to a number of investors who have reacted quite positively to US West's prudent approach to reducing its ownership interest in FSA and the steps FSA and US West have taken to address the real estate issues."
In other action, PaineWebber Inc. tentatively priced $150 million various bonds for the Tucson, Ariz., Unified School District No. 1.
The tentative offering included $90 million school improvement bonds priced to yield from 3.30% in 1995 to 5.50% in 2013 and $57 million refunding bonds priced to yield from 2.60% in 1994 to 5.45% in 2010. There also were non-callable premium zeros priced to yield 5.10% in 2002 and 5.20% in 2003. Improvement bonds in 2010 and 2011 are non-callable as are refunding bonds in 2010.
The issue is insured by the Financial, Guaranty Insurance Co. and rated triple-A by Moody's, Standard & Poor's, and Fitch.
Goldman, Sachs & Co. priced and repriced $98 million Maryland Health and Higher Educational Facilities Authority refunding revenue bonds for the Francis Scott Key Medical Center.
At the repricing, the 2023 term bond yield was raised about one basis point and a 2018 maturity was added to the scale.
The final pricing included serials priced to yield from 3.80% in 1996 to 5.40% in 2008. A 2013 term was priced as 5s to yield 5.50%; a 2018 term was priced as 5s to yield 5.55%; and a 2023 term was priced as 5s to yield about 5.56%.
The bonds are FGIC-insured and triple-A rated by Moody's, Standard & Poor's, and Fitch.
Action was light to moderate as the market begins to shift down ahead of Friday's employment report and the holiday weekend.
Supply continues to hover, fluctuating slightly up or down each day. The Blue List of dealer inventory fell $17.4 million, to $1.58 billion.
Traders said selling dominated the open, led by several bid-wanted lists in the $30 million to $40 million range.
There also were some sizable blocks of bonds out for the bid, traders said. Municipal Market Data Co. reported a new block to the market, $13 million Texas 5 1/4s of 2020. MMD also reported $10 million Texas Municipal Power Agency MBIA 51/4s of 2007 out for the bid.
In secondary dollar bond trading, prices were quoted unchanged to down 1/8 to 1/4 point in spots.
In late action, Puerto Rico Public improvement 5 1/4s of 2018 were quoted down 1/8 at 99 1/2-1/2 to yield 5.31%; Omaha PPD 5 1/2s of 2017 were Quoted down 1/8 at 98 1/4-1/2 yield 5.63%; and Seattle Light 5 3/8s of 2018 were quoted down 1/8 at 96 1/2-1/2 to yield 5.66%.
Orange and Orlando FGIC 5%s of 2018 were quoted down 1/8 at 5.63% bid. 5.61 % offered; Washington Public Power Supply System MBIA 5.70s of 2017d were quoted unchanged at 99 1/2-1/2 to yield 5.76%; and Chicago GO FGIC 5 5/8s of 2023 were quoted down 1/4 at 98-1/2 to yield 5.76%.
In short-term note trading, yields were unchanged to five basis points higher in spots.
In late action, New York State Trans were quoted at 2.20% bid, 2.15% offered; Los Angeles County Trans were quoted at 2.57% bid, 2.55% offered; and Texas Trans were quoted at 2.25% bid, 2.20% offered.