Municipal prices were unchanged to 1/8 point higher in light trading yesterday as buyers took a breather after last week's $6.4 billion of new deals.
The credit markets were relieved last Friday when potentially harmful inflation levels proved to be under control, leaving tax-exempt players to work through the plethora of new deals priced last week.
But traders said that customers seemed to take a break yesterday, ahead of today's new-issue slate, and business was moderate.
Nevertheless, the tone was firm and some prices were slightly higher by session's end. The September municipal futures contract settled up 4/32, to 94.30, and the MOB spread was calculated at negative 154.
Traders painted two scenarios for near-term price prospects late in the session, adding that with a light economic calendar, movement could depend largely on market psychology.
"One way of looking at it is that we have managed to hold some critical support levels and the market has a good bid to it." said one trader. "The other side of the coin is that we failed to get anything done on the Friday rally, which means we're range-bound and set to drift lower."
In the absence of economic indicators, the market often relies on the results of new issues for direction, and the Street will be watching the outcome of today's new-issue slate for evidence of investor sentiment.
N.Y.C. Water Authority
Dominating today's negotiated calendar is $200 million of New York City Municipal Water Authority Water and Sewer System revenue bonds, to be priced by a syndicate led by Smith Barney, Harris Upham & Co.
The issue was originally planned as a variable-rate deal, but market sources said that the issue will include two $100 million tranches, with bonds maturing on June 15, 2021. Sources said bonds in the first tranche will have call dates of June 15, 1997, at $101.5 and bonds in the second tranche will be callable June 15, 2002, at $102. The offering will include insurance, provided by AMBAC Indemnity Corp. Market players speculated that yields could be as low as 6.50%.
Demand has been strong recently for insured New York paper and, late yesterday. Triborough Bridge and Tunnel Authority AMBAC 6 1/4S of 2012, a comparable credit to city waters, were quoted at 98 1/2-3/4 to yield 6.38%.
Also expected to be priced is $100 million of Wisconsin Housing and Economic Development Authority single-family mortgage revenue bonds, by Lehman Brothers.
To date, supply in 1992 totals approximately $95 billion, according to figures compiled yesterday by The Bond Buyer. That's a 47.49% increase over last year's total of $64.7 billion for the same period.
The Bond Buyer's 30-day visible supply rose to $4.28 billion yesterday, while The Blue List of dealer inventory fell $39.4 million to $1.37 billion.
In follow-through business in the competitive sector, Lehman Brothers, senior manager of $125 million of Baltimore County, Md., unlimited tax bonds, reported all bonds sold and the account closed by midsession.
Chemical Securities reported an unsold balance of $41 million from $250 million New York State various-purpose, full faith and credit bonds, sold last week.
Prudential Securities reported an unsold balance of $23 million from $146 million of Washington Suburban Sanitary District, Md., unlimited tax bonds, also priced last week.
First Boston reported an unsold balance of $6.8 million from $104 million Commonwealth of Virginia full faith and credit bonds.
Negotiated deals priced last week appear to be holding at or near the original levels, reflecting the market's vibrant underlying tone.
The First Boston Corp. yesterday freed $286 million of Georgia Municipal Electric Authority Project 1 special obligation bonds from syndicate restrictions.
In late secondary trading, the maximum term bonds of 2017, originally offered to investors as 6 1/2S to yield 6.572%, were quoted trading at 99 3/8-1/2 to yield approximately 6.55% on the bid-side. The AMBAC-insured 6.40s of 2013 were quoted at 99 3/4-100 to yield 6.42%, compared to the original 6.45% reoffering yield.
Traders said that activity was subdued yesterday, despite the firm tone and relatively friendly economic calendar.
In secondary dollar bond trading, prices were quoted unchanged to 1/8 point higher in light dealings.
Florida Municipal Power Agency AMBAC 6s of 2027 were quoted at 93 1/2-3/4 to yield 6.47% and Greater Orlando Aviation Authority AMT 6 3/8S of 2021 were quoted at 97 7/8-98 to yield 6.53%.
Traders of short-term securities reported little activity, with most investors looking toward today's sale of $1.5 billion Los Angeles six-month tax and revenue anticipation notes.
Late in the session California Rans were quoted at 3.90% bid, 3.80% offered and New York State Trans were quoted at 3.89% bid, 3.87% offered.
In pre-refunded bond trading, bonds with national names callable in 1995 were quoted at 4.68% on the bid side and 4.60% on the offered side, while bonds callable in 1996 were quoted at 4.98% bid, 4.90% offered.
A.G. Edwards & Sons priced $83 million of Missouri Health and Educational Facilities Authority revenue bonds for the St. Louis Children's Hospital.
The offering included serial bonds priced to yield from 3.25% in 1993 to 6.10% in 2004. A 2012 was priced as 6 1/4S to yield 6.384% and zero coupon bonds were priced to yield 6.40% in 2005 and 6.45% in 2006.
The issue was insured by Municipal Bond Investors Assurance Corp. and triple-A rated by Moody's and Standard & Poor's.