Municipal bond prices were quoted lower yesterday amid heavy selling as yields continued to trend higher.
The credit markets appeared as if they might bounce back from losses of 3/4 to one point at the opening, but sellers took over. One firm estimated bid-wanted lists at around $300 million. Trading was termed light and by session s end, prices were quoted 1/4 to 3/8 point lower on average.
In secondary dollar bond trading, New York City Municipal Water 5 1/2s of 2019 were quoted at 5.85% bid, 5.80% offered; Chicago O'Hare MBIA 5s of 2018 were at 5.73% bid, 5.68% offered; and Florida State Board of Education 5 1/8s of 2022 were 93 1/2-94 to yield 5.48%.
In the debt futures market, traders said prices were supported by a MOB spread buyer. The December municipal contract settled down 4/32 at 100.25. The contract hit a low of 100.18 and a high of 101.03. The MOB spread narrowed to negative 443 from negative 451 on Friday.
Reflecting the heavy tone, The Blue List of dealer inventory rose $54.9 million yesterday, to $1.75 billion. The Blue List has exceeded $1.5 billion for 24 consecutive business days. To date in 1993, it has averaged $1.57 billion compared with $1.36 billion in 1992.
The Bond Buyer calculated 30-day visible supply at $4.23 billion. Municipal bond volume totaled $299.82 billion as of Nov. 19, 1993.
PaineWebber Inc. priced, repriced, and restructured $120 million noncallable Ohio full faith and credit general obligation infrastructure improvement bonds.
Yields were lowered by five basis points in 1995, 1996, and 1997. A 2011 maturity was added.
There were $90 million current interest bonds, priced to yield from 3.35% in 1995 to 5.35% in 2011. There also was $9 million of zero coupon bonds, priced to yield 5.55% in 2012 and 5.55% in 2013.
The managers said they expected the deal to be rated double-A by both Moody's Investors Service and Standard & Poor's Corp.
Bear, Steams & Co. tentatively priced $104 million Illinois Housing Development Authority housing development bonds.
Serial bonds were priced to yield from 3.10% in 1994 to 5.5 5% in 2006. A 2013 term, containing $34 million of the loan, was priced as 5.90s to yield 5.95%, and a 2018 term, containing $33 million, was priced at par to yield 6%.
The bonds are rated Al by Moody's and A-plus by Standard & Poor's.
New York Water Authority
The New York City water authority yesterday took the first steps in setting up a commercial paper program by issuing a request for proposals document to bond dealers.
The document said the authority "is considering implementing a commercial paper program, or a program involving a similar type of short-term debt instruments, in December 1993 in the amount of $200 million to $500 million."
The RFP asked bond dealers to demonstrate their ability to structure and underwrite commercial paper and short term, tax-exempt securities. The proposals are due Nov. 30 at 2 p.m., eastern standard time.
"It's another way of accessing the short-end of the market," said Mark Page, deputy director of the city's Office of Management and Budget, and the authority's executive director. "It's worth exploring. By sending out an RFP, we are looking to see what people have to say on the subject."
Bond dealers interviewed for this report said the RFP request was unusual, given the change that will take place at city hall in January, when Rudolph Giuliani succeeds David N. Dinkins as New York City mayor.
"It probably makes perfectly good business sense for the city to have a commercial paper program," said one dealer. "But why do it now? This can't wait for January?"
But Page said the program is important because it can help the city in many ways. Page said the program, a potential first for the authority, would supplement the agency's use of the state's environmental revolving fund for certain capital projects.
Under the program, the state Environmental Facilities Corp. issues bonds on behalf of the water authority, although the authority is reponsible for the debt service on the securities. The program allows the authority to tap into both federal and state subsidies on its financings.
Page said commercial paper could provide a financing "bridge" for the authority when using the state's environmental revolving fund.
Page said the fund does not immediately reimburse the authority after it finances projects covered by the program. The commercial paper, which is a short-term debt instrument, would finance the projects until the revolving fund money is available, Page said.