Prices sank yesterday and new deals received a mixed response as buyers retreated ahead of fresh supply and a weaker government market.
What began as profit-taking on Friday after a week of handy gains, turned into renewed weakness yesterday. Higher precious metal prices sent the Treasury 30-year bond down nearly 1/2 point to yield 6.23% and the March municipal contract fell 11/32 to 102.21 soon after the opening.
Tax-exempt cash prices followed suit and were quoted 1/4 to 3/8 point lower by mid-morning. Government bond traders said their market was also backing up on the notion that this week's economic reports would show more strength in the economy. Municipal players face the added pressure of year-end new issuance. The Bond Buyer's tally of 30-day visible supply surged to $7.58 billion yesterday from $5.6 billion Friday.
With those obstacles ahead, tax-exempt cash prices retreated 1/4 to 3/8 point by session's end.
In late secondary dollar bond trading, San Jose 5s of 2020 were quoted at 5.45% bid, 5.40% offered; Orange and Orlando FGIC 5 1/8s of 2020 were 5.38% bid, 5.35% offered; Chicago O'Hare MBIA 5s of 2018 were 5.46% bid, 5.43% offered; and Florida State Board of Education 5.20s of 2023 were quoted at 96 3/4-97 1/8 to yield 5.42%.
Reflecting selling activity, The Blue List of dealer inventory rose $192 million yesterday, to $1.496 billion.
In the debt futures market, the March municipal contract settled down 14/32 to 102.18. The MOB spread widened to negative 403 from negative 401 on Friday.
In the short-term note sector, yields were narrowly mixed on the day, traders said. In late action, California Rans were quoted at 2.10% bid, 2.05% offered; New York City Tans were quoted 2.08% bid, 2.04% offered; and Pennsylvania Tans were 2.12% bid, 2.09% offered.
Despite the weaker tone, traders noted yesterday that the market still had failed to break out of the recent trading range, defined as a high yield of 6.11% on the 30-year government bond, and a low of about 6.24%. They added that prices would very likely remain within that somewhat broad range, unless economic data or some unforeseen event affected prices significantly.
Market activity was primarily concentrated in new issues, while secondary trading was termed lack-luster.
Underwriters logged mixed results yesterday after last week's buying deluge boosted prices on most issues that came to market.
PaineWebber Inc. tentatively priced $288 million Arizona Transportation Board subordinated highway revenue refunding bonds, the largest deal in either the negotiated or competitive sector,
The offering was made up of serial bonds only, priced to yield from 3.20% in 1995 to 5.18% in 2011.
Bonds in 2008 and 2010, totaling about $82 million, were non-callable.
The offering is rated double-A by Moody's Investors Service and Standard & Poor's Corp.
The Robinson-Humphrey Co. priced and repriced $203 million revenue bonds for the Florida Municipal Power Agency.
At the repricing, serial bond yields were cut by 10 basis points from 2000 through 2003. Yields were raised by two basis points in 2006; by five basis points in 2007; by four basis points in 2014; and by three basis points in 2025.
The final offering included serial bonds priced to yield from 2.50% in 1994 to 5.15% in 2010. A 2014 term was priced as 5.10s to yield 5.30% and a 2025 term, containing $115 million, was priced as 5.10s to yield 5.389%.
The bonds are AMBAC-insured and rated triple-A by Moody's and Standard & Poor's. Smith Barney Shearson priced, repriced, and restructured $119 million refunding bonds for the state of Missouri's convention and sports facility project.
At the repricing, yields were lowered by five basis points in 1994, but raised by five basis points throughout the rest of the curve. A 2017 term maturity was added to the scale.
The final offering included serial bonds priced to yield from 2.75% in 1994 to 5.45% in 2008. A 2013 term was priced as 5 1/2s to yield 5.55%; a 2017 term was priced as 5.60s to yield 5.65%; and a 2021 term, containing $35 million, was priced as 5 1/2s to yield 5.65%.
The bonds are rated A1 by Moody's, A-plus by Standard & Poor's, and AA by Fitch Investors Service.