Tax-exempt bond prices drifted in very light, dealer activity yesterday as traders awaited this week's big new-issue calendar and today's Humphrey-Hawkins testimony by Federal Reserve Chairman Alan Greenspan before the House Banking Committee.

Both the competitive and negotiated slates were light, "even for a Monday," one trader commented. Prices ended the session essentially unchanged, but if there was any direction at all, "you could call it 1/8 point easier on some items," he added.

Traders estimated the size of this week's calendar at around $3 billion, but more could be on tap, they warned. They really didn't think that Mr. Greenspan's testimony would unveil any surprises as far as interest rates go as the Federal Reserve seems to be content with its current steady-as-you-go policy.

A $123 million negotiated offering of Illinois Housing Development Authority residential mortgage revenue bonds topped the calendar, and reached the market through an account headed by Merrill Lynch & Co. New-issue demand was again strong and allowed yields to be lowered by 10 basis points on the earlier serial maturities.

The offering included $89.1 million alternative minimum tax bonds with serial yields ranging from 5.70% in 1994 to 7.10% in 2004 and term bonds returning 7.35% in 2010 and 7.45% in 2024. The super sinkers of 2022 will yield 6.95%.

The $33.9 million non-AMT bonds will return 7.25% in 2017.

All bonds were priced at par. They are rated Aa by Moody's Investors Service and A-plus by Standard & Poor's Corp.

In another negotiated offering, an account co-managed by PNC Securities Corp. and Seasongood & Mayer began marketing $64 million Hamilton County, Ohio, hospital facility revenue bonds for the Christ Hospital.

Yields on the serial bonds were tentatively scaled from 5.25% in 1993 to 6.70% in 2003. There will be no formal reoffering for the 1992 serial maturity or the term bonds maturing in 2006 and 2007.

The issue will be backed by Financial Guaranty Insurance Co. and is rated triple-A by Standard & Poor's and Moody's.

In the competitive arena, an account headed by Goldman, Sachs & Co. reported an unsold balance of $13.5 million for an issue of $47.5 million Las Vegas-Clark County Library District, Nev., insured limited tax bonds, rated triple-A by Moody's and Standard & Poor's.

The bonds were priced to yield from 5% in 1992 to 6.95% in 2007 for the serial portion of the loan with the 6.90% term bonds of 2011 offered at 7%. The issue is backed by FGIC.

In secondary dollar bond trading. New Jersey Turnpike Authority 7.20s of 2018 were quoted near the close at 103-103 1/4 to yield 6.64% to the 1999 per call and 6.81% to the 1993 premium call.

Florida State Board of Education 7-1/4s, due 2023, were quoted in late trading at 102 1/4-103 to yield 6.89% to their par call in 2004. And New York LGAC 7s of 2016 were at 95 3/4-96 1/4 to yield 7.33% to maturity.

The market for prerefunded bonds with a 1995 call ranged from 5.80% to 5.85% offered to 5.82% to 5.87% bid, depending on name and coupon.

Today, traders will get a chance to bin on a $60 million institutional list comprised of high-grade general obligation and revenue bonds with maturities ranging from 1997 through 2001.

Future Analysis

David Madigan, vice president and manager of municipal strategy at Merrill Lynch & Co., pointed out in the firm's latest edition of Fixed-Income Weekly that the municipal futures contract has been trading at a discount to the cash market as open interest and trading volume have fallen. Recently, open interest has been below 6,000 contracts, and trading activity below 5,000, he noted.

There are very few "reverse cash-and-carry investors" in the market due to a lack of supply in the municipal cash market, Mr. Madigan explained. And portfolio managers seem to be shy about selling bonds without a cash replacement, he suggested.

On the other hand, Mr. Madigan said that many portfolios have heavy cash positions, but that those funds are not buying the municipal contract either. With the contract as much as a point cheap to theoretical value, the estimated annualized yield on the synthetic long position is in excess of 12%, and over 10% after a 31% tax, he pointed out.

The municipal-over-bond (MOB) spread reached new highs last week, Mr. Madigan continued. The MOB closed last Friday at negative 67 before moving back to negative 70 yesterday. For most of last week, the market had nontraditional buyers with commodities and other brokers purchasing the municipal contract to "take advantage of the positive technical position of the municipal cash and futures markets," Mr. Madigan explained.

With "limited supply and growing demand," municipal prices should be "cushioned from any Treasury market decline," Mr. Madigan wrote. Overall, there is some expectation that the MOB could have a positive close before the August Treasury refunding, he concluded.

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