Municipal prices were higher yesterday, and traders reported good investor demand for new deals and secondary stock.
Treasury prices were firmer, and tax-exempts followed suit. Municipal market players concentrated on selling or trading bonds from the deluge of supply that hit the market during the last two weeks.
Nearly $8 billion of new deals were priced during that period of time, but The Blue List, and indicator of dealer inventory, fell $97 million yesterday, to $1.38 billion, a manageable level, traders said.
"The tone is firm, and we've seen a lot of business get done," one trader acknowledged. "Most of the negotiated deals that have been freed to trade have held at or better than the original levels, and underwriters are chipping away at the competitive balances."
"You're supposed to sell them when they want them, and they want them bad today," echoed another trader.
By session's end, prices were quoted up 1/8 to 1/4 point on average. In the debt futures market, the September municipal contract settled up 3/32, to 95.17. The MOB spread was calculated at negative 155.
In relatively light negotiated new-issue activity, underwrites were able to lower yields.
Goldman, Sachs & Co. as senior manager priced and repriced $243 million of Intermountain Power Agency power supply revenue refunding bonds.
Serial bond yields were lowered five to 10 basis points, while term bond yields were lowered about three basis points.
The final reoffering scale included $36 million Series A bonds priced to yield from 3% in 1993 to 6.25% in 2007. A 2012 term was priced as 6s to yield 6.393% and a 2021 term was priced as 6s to yield 6.45%. About $207 million Series B bonds were priced to yield from 3% in 1993 to 6.25% in 2007. A 2012 term, containing $43 million of the loan, was priced as 6s to yield 6.393% and a 2012 term was priced as 6s to yield 6.45%.
The bonds are rated double-A by both Moody's Investors Service and Standard & Poor's Corp.
Goldman also priced and repriced $115 million of North Central Texas Health Facilities Development Corp. hospital revenue bonds for the Baylor Health Care System project.
Some serial bond yields were lowered 10 basis points.
The final pricing included about $65 million of Series A bonds priced to yield from 3.40% in 1993 to 6.30% in 2004. A 2012 term was priced as 6s to yield 6.55%. There also was $50 million series B bonds not formally reoffered to investors.
The managers said they expect the deal to be rated double-A by both Moody's and Standard & Poor's.
In follow-through business, Smith Barney, Harris Upham & Co. freed $200 million of New York City Municipal Water Finance Authority water and sewer system revenue bonds from syndicate restrictions.
In late trading, the AMBAC 6 1/2s of 2012 were quoted at 99 1/2-5/8 to yield 6.53%, where they were originally offered to investors as 6 1/2s to yield 6.51%. The AMBAC 6.20s of 2021 were quoted at 97 3/8-1/2 to yield 6.40%, right at the original offering.
PaineWebber Inc., senior manager for $123 million Connecticut Housing Finance Authority housing mortgage finance program bonds, freed the issue from syndicate restrictions. But traders said there were few bonds in the secondary.
Secondary activity was brisk during the morning session, but tapered off in the afternoon, traders said.
Market sources reported bid-wanted lists circulating in the Street and some sizable trades, including a $20 million block of Florida Transportation bonds, which were said to have changed hands right around 6.46%.
In other secondary dollar bond trading, prices were 1/8 to 1/4 point better on average, traders said.
Triborough Bridge and Tunnel Authority AMBAC 6 1/4 of 2021 were quoted at 98 3/4-99 to yield 6.36%, Greater Orlando Aviation Authority AMT 6 3/8s of 2021 were quoted at 98 1/4-1/2 to yield 6.51%, and South Carolina PSA 6 5/8s of 2031 were quoted at 100-1/8 to yield 6.62%. California 6 1/4s of 2012 were quoted at 98-1/4 to yield 6.42%, and Oklahoma Turnpike Authority MBIA 6 1/4s of 2022 were quoted at 98 1/8-3/8 to yield 6.39%.
Short-term traders reported a busy day, with yields dipping from 10 to 15 basis points.
Late in the day, California Rans 3 1/4 were quoted at 4.00% bid, 3.90% offered; San Bernadino, Calif., Trans 3 3/4s at 2.99% bid, 2.95% offered. Pennsylvania Tans 5s were heavily traded today, according to a trader who moved $80 million of the notes, and at the end of the session yields had backed up 20 basis points were quoted at 3.80% bid, 3.70% offered; and New York State Trans were quoted at 2.80% bid, 2.78% offered.
In pre-refunded bond trading, bonds with national names, callable in 1995, were quoted at 4.64% on the bid side and 4.58% on the offered side, while bonds callable in 1996 were quoted at 4.95% bid, 4.87% offered.
Merrill Lynch & Co. priced $44 million of St. Petersburg, Fla., utility tax refunding revenue bonds.
Serial bonds were priced to yield from 3.20% in 1993 to 6.30% in 2008.
Maturities from 1995 through 2008 are insured by AMBAC and triple-A rated by Moody's and Standard & Poor's. The 1993 and 1994 maturities are rated A 1 by Moody's and A-plus by Standard & Poor's.
New York City to Sell Notes
New York City will settle its 1993 fiscal year cash-management needs in one shot, with a simultaneous sale of $700 million in tax anticipation notes and $700 million in revenue anticipation notes next Thursday, said deputy comptroller for finance Darcy Bradbury.
The note normal cash-management city's normal cash-management agenda, allowing the city to pay for services while it waits on tax revenues and state aid payments. The total amount of the sale matches the recommendation given by the state's Financial Control Board in a recent report.
Ms. Bradbury said the city moved up the date of the sale from the traditional July or August date to take advantage of the surfeit of investor cash expected after July 1, when about $8 billion of municipal bonds will be redeemed. The redemptions as well as the strength of the market at this time will likely save the city 10 basis points. Ms. Bradbury said.
The Tans will mature on April 14, 1993, while the Rans will mature June 30, 1993.
The city crafted the maturities of the deal to suit investor interest, as well as lower the city's borrowing costs. The April 14 Tan maturity date as designed to increase participation in the deal from money market funds, which usually experience an outflow of investor cash during tax season.
This year's issue is significantly less than the $2.25 billion issued for cash-management purposes in the current fiscal year, which ends June 30. Ms. Bradbury attributed the reduction to the existence of the state's Local Government Assistance Corp., established by the state legislature in 1990 to speed up state aid payments to municipalities.
Moody's rates the city's Tans MIG-1, Standards and Poor's rates the notes SP1-plus, and Fitch rates them F 1-plus.
Moody's rates the Rans Mig-2, Standard & Poor's rates them SP-1, and Fitch rates them F 1-plus.