Municipal prices were firm yesterday ahead of today's slew of economic data and yields on new issues were lowered as demand continued to outweigh supply.
The government market faded slightly in the afternoon, and the municipal futures contract slipped in sympathy, but secondary prices held steady in light trading.
The markets continue to anticipate an ease in monetary policy, and today's indicators, featuring the September consumer price index, will be watched closely.
In light competitive new issue activity, a total of $80 million Clark Co., Nev., limited tax general obligation flood control bonds were won by Morgan Stanley, Bear, Stearns, and BT Securities as comanagers.
A $45 million portion was won with a true interest cost of 5.84%, priced to yield from 4.50%in 1992 to 6.05% in 2001.
The 1995-1999 maturities are insured by AMBAC Indemnity Corp. and triple-A rated by Moody's Investors Service, while the 1992-94 and 2000 and 2001 maturities are rated A1 by Moody's and A-plus by Standard & Poor's Corp.
The remaining $35 million was won with a TIC of 6.44% and were priced to yield from 6.10% in 2002 to 6.45% in 2006.
The bonds are all insured by AM-BAC and triple-A rated by both Moody's and Standard & Poor's.
The Morgan group reported a combined unsold balance of $21.5 million late in the session.
Negotiated activity was also light. Lehman Brothers as senior manger priced and repriced $50 million Michigan STate Housing Development Authority single-family mortgage revenue bonds to lower some yields by five basis points.
The offering included serials priced at par to yield from 4.85% in 1993 to 6.55% in 2006. A 2012 term super sinker is priced at par to yield 6.30%, and a 2020 term is priced at par to yield 6.95%.
The issue was not rated by Moody's, and rated AA by Standard & Poor's.
Traders reported a thin secondary market and cited good technicals, but added that supply could be a problem at the lower interest rates.
"If we get a couple of hung-up deals the technicals could change real quick," one trader said. "It's important to keep an eye on supply right now because if a deal comes too aggressive there could be problems."
Looking ahead to supply, the 30-day visible totaled $3.25 billion yesterday, down $115.4 million from the previous session. Standard & Poor's Blue List dealer inventory totaled $1.1 billion, down $56 million on the day.
The calendar is expected to grow as issuers tap the market for low borrowing rates in a year-end rush.
In secondary activity, traders reported a steady flow of bid-wanteds for most of the session, including a $50 million list. Trades were mostly at slightly lower yields, sources said, despite the market's slight fade near the end of the session.
Market sources said that a block of California GO 6s of 2007 in the $2 million to $3 million range traded around 6.20% less 1/4. A $5 million block of MBIA insured St. Petersburg, Fla., Allegheny Health System hospital 7s of 2015 were rumored to have traded around a 6.70% less 1/4, $2.5 million AMBAC-insured Alabama 6 1/4s were rumored to have traded around a 6.60% net, and a larger block of Washington Public Power Supply System 7 1/4s of 2015 were said to have traded around a 6.90% less 1/8. Market sources said that $10 million New York City bonds were out for the bid, but did not trade.
Denver Airport bonds made back about 1/4 point of their 1/2 point losses from the previous session. Denver Airport 7 3/4s of 2021 were quoted late in the session at 95 3/4-7/8 to yield approximately 8.12%.
In other dollar bond activity, prices were unchanged to 1/8 point stronger.
New York City Water Authority 7s of 2015 were quoted at 99 3/8-1/2 to yield 7.04%, while Triborough Bridge and Tunnel Authority insured 6 5/8s were quoted at 99 3/8-1/2 to yield 6.66%.
In the debt futures market, the December municipal contract settled down 5/32 to 94.28. The December MOB spread was calculated at negative 161.
In short-term note trading, prices were narrowly mixed.
In late secondary trading, Los Angeles Trans were quoted at 4.22% bid, 4.18% offered, while March New York State Trans were quoted at 4.90% bid, 4.85% offered. Texas Trans were quoted at 4.28% bid, 4.25% offered and Pennsylvania Tans were quoted at 4.31% bid, 4.25% offered. New York City Rans were quoted at 4.95% bid, 4.19% offered.
First Boston priced $31.5 million California Health Facilities Financing Authority insured hospital revenue bonds for the Scripps Memorial Hospital.
The offering included serials priced to yield from 5.40% in 1996 to 6.35% in 2005.
A 2013 term is priced to yield 6.45%.
The bonds are MBIA insured and triple-A rated by both Moody's and Standard & Poor's.