Municipal trading was moderate yesterday ahead of today's busy new-issue slates, but bullish market players pushed prices higher, continuing last week's rally.
Although the Street is waiting to see if underwriters will continue to price deals aggressively, last week's optimism carried over into yesterday's session as demand continued to outstrip supply.
On average, bond prices improved 1/4 to 3/8 point, but discount bonds outperformed other bonds, rising 1/2 to 3/4 point on the day, traders said, while high-grade bond prices improved about 1/4 point.
In the debt futures market, the September municipal contract settled up 14/32 to 99.19, while the MOB spread was calculate at negative 144.
"Strong demand remains steady and people are waiting for the next batch of new issues," one trader said. "We need to see if these deals get done with five handles or whether we're going to move back to the 6.20% range for long bonds."
Supply is on the increase this week for the first time in nearly one month. The Bond Buyer calculated 30-day visible supply at $4.94 billion, while The Blue List of dealer inventory totaled $884 million.
Leading light new-issue action yesterday, a syndicate led by Lehman Brothers as senior manager priced and repriced $208 million of Jacksonville Electric Authority refunding revenue bonds for the St. Johns River Power Park System.
At the repricing, yields were lowered by 10 basis points; in 1992 and 1993, while the 2014 term maturity was lowered by about two basis points.
The final reoffering scale included serial bonds priced at par to yield from 2.40% in 1992 to 5.75% in 2007. A 2010 term was priced as 5.90s to yield 5.92%, a 2012 term was priced as 5 3/4s to yield 5.975%, and a 2014 term, containing $93 million of the loan, was priced 5 1/2s to yield 5.984%. There also were noncallable capital appreciation bonds priced to yield 6.20% in 2010 and 2011.
The managers said they expected to be rated Aal by Moody's Investors Service and AA by Standard & Poor's Corp.
In other action, Paine Webber Inc. priced and repriced $102 million of Charleston County, S.C., hospital facilities revenue refunding and improvement bonds for the Medical Society Health Systems project.
Yields were lowered by five basis points in 1994, by two basis points in 2022, and by about one basis points in 2019. Yields were raised by 10 basis points in 1993 and 1995 and by five basis points in 1996 and 1997.
The final reoffering scale included serial bonds priced to yield from 2.85% in 1993 to 5.40% in 2002. A 2005 term was priced as 5 1/2s, but was not formally reoffered to investors, while a 2009 term was priced as 6s at par. A 2019 term, containing $45 million of the loan, was priced as 5 1/2s to yield 6.067%, and a 2022 term was priced as 5s to yield 6.022%.
The bonds are insured by Municipal Bond Investors Assurance Corp. and triple-A rated by both Moody's and Standard & Poor's.
First Boston priced $57 million of Dade Country, Fla., aviation revenue refunding bonds for the Miami International Airport.
Serial bonds were priced to yield from 2.75% in 1993 to 5.40% in 2002.
The managers said they expected the issue to be rated Aa by Moody's and A by Standard & Poor's.
In secondary dollar bond trading, prices were quoted up 1/4 to as much as 5/8 point in spots.
In late action, Colorado Springs 6 1/8s of 2020 were quoted at 100 5/8-3/4 to yield 6.04% on the bid-side to the par call, Texas Municipal Power Authority MBIA 5 3/4s of 2012 were quoted at 97 1/2-3/4 to yield 5.96%, and Salt River Ariz. 5 3/4s of 2019 were quoted at 97-98 to yield 5.97%. South California Public Power Authority 5 3/4s of 2021 were quoted at 97 1/2-3/4 to yield 5.93%.
In short-term note trading, yields rose about five basis points on average, traders said.
In late action, Iowa Trans were quoted at 3.03% bid, 3% offered, Los Angeles Trans were quoted at 2.82% bid, 2.80% offered, and New York City Trans were quoted at 2.82% bid, 2.75% offered. Wisconsin notes were quoted at 2.90% bid, 2.85% offered and New York State Trans were quoted at 2.82% bid, 2.78% offered.
SCCPA Ratings Confirmed
Standard & Poor's affirmed its AA-minus rating on $475 million of Southern California Public Power Authority transmission project revenue bonds yesterday, according to senior manager Smith Barney, Harris Upham & Co.
Moody's which is also reviewing the deal, had not yet issued a rating yesterday afternoon.