Municipal prices remained in a narrow range Friday as traders and investors steadied themselves after the release of the largest-ever 30-day visible supply.
According to The Bond Buyer, forward supply stood at a record $9.21 billion on Friday. The highest level listed before that had been $8.89 billion on Nov. 13, 1985.
Included in Friday's figure was $7.7 billion in negotiated deals -- another record.
Volume for this week, including notes and bonds, is estimated at $10.9 billion. The estimate for weekly volume has not been that high since Dec. 13, 1985.
Although that total included 19 "day-to-day" negotiated issues totaling $1.65 billion, market participants expressed "deep concerns" about the level of supply.
Last week, a combination of heavy municipal supply and uncertainly about the European monetary situation contributed to the postponement of several large deals until this week.
Even with several deals placed on the back burner, long-term sales totaled $3.93 billion last week. This was the highest since the week ended Aug. 21, when total sales were $4.24 billion.
On Thursday, after most of the new deals of the week were priced, traders said the market had found a level where some business could get done.
"It looked as if supply, although still pretty heavy, was starting to ease," said a trading desk head. "But then, late Thursday and Friday morning, all these big new deals came in and we're right back at dangerous levels."
"It's a scary number," said Glen R. Rauch, president of Glen Rauch Securities. "The market suffered last week on supply and it looks like it'll suffer again."
Supply will drive the municipal market, Mr. Rauch noted, but there are also several important indicators that investors will be watching.
"Initial claims, housing starts, and durable goods are all released this week," Mr. Rauch said. "They should show the economy is still lousy."
Although concerned about the supply this week, Mr. Rauch added that last week and the next two weeks represent "the last major period of issuance of the year."
"The market gets a breather after this," he said. "Uncertainty about the election will cause some deals to be put on hold and nothing gets done in December."
The negotiated, competitive, and short-term sectors will all price large deals this week.
In the negotiated sector, the largest deal on the slate is an issue of $1.45 billion on North Carolina Eastern Municipal Power Agency revenue and refunding bonds bonds by Smith Barney, Harris Upham & Co.
The deal is slated to be priced on Tuesday or Wednesday and, except for a $155 section of new money, refunds all of the authority's outstanding debt.
Other negotiated deals include $700 million of Washington Public Power Supply System refunding bonds by First Boston Corp., $350 million of Ohio Water Authority refunding bonds by Goldman, Sachs & Co., and $ 494 million of New York State Medical Care Facilities Authority refunding bonds by Goldman Sachs.
In the competitive arena, issues of $189 million of New York State general obligation bonds, $146 million of New Jersey GOs, and $125 million of Kansas Department of Transportation revenue bonds highlight the schedule.
In short-term financing, issues of $1.6 billion of New Jersey tax and revenue anticipation notes and $600 million of Pennsylvania tax anticipation notes will be priced.
Traders reported a lackluster day of trading on Friday with prices ranging from 1/8 point higher to 1/8 point lower.
In futures, the December municipal contract settled down 2/32, to 96.13. The December MOB spread hit a record high for this contract, at a negative 299.
Most of the day's activity, according to trading desk head, was completed by noon.
In secondary action, prices were mixed in listless action.
In heavily traded names, Chicago GOs AMBACs 5 7/8s of 2022 were quoted at 93 1/2-94, to yield 6.36%; Puerto Rico GOs 6s of 2014 were quoted at 95 1/2-95 3/4, to yield 6.38%; and New York City Water Authority 6s of 2017 were quoted at 93 3/4-94 1/4, to yield 6.51%.
Denver Airport Authority 6 3/4s of 2022 were quoted at 96 3/4-97, to yield 7.0%; Los Angeles Department of Water and Sewer Authority 6s of 2032 were quoted at 95 1/2-96, to yield 6.30%; Cook County, Ill., GOs 5 1/2s of 2022 were quoted at 88 5/8-88 3/4, to yield 6.35%; and Florida Board of Education 6s of 2025 were quoted at 96-96 3/8, to yield 6.28%.
In the short-term sector, traders said that yields were mixed in very quiet trading.
In late secondary action, Los Angeles Trans were quoted at 3.10% bid, 3.05% offered; Texas Trans were quoted at 3.10% bid, 3.05% offered; Wisconsin notes were quoted at 3.12% bid, 3.10% offered; and New York State Trans were quoted at 3.22% bid, 3.18% offered.