As much as $400 million in bonds crowded the bid wires yesterday but dealers reported good going-away business to permanent investors, and prices made modest gains.
"There have been some sizable blocks out for the bid and people are looking to move out if the price is right," a New York-based trader said. "Customers are definitely going to blow it out if they can and it looks like a lot went away."
Market sources said there have been two big sellers in the secondary over the last week, liquidating short paper. There also have been significant numbers of smaller lists, and odd lots out from customers.
Quoted dollar bonds were mostly unchanged with some bonds posting slight gains of 1/8 to 1/4 point. "The market seems like it's in good shape and rates are going lower," a trader said. "But, the market seems a little tired and we're waiting to see what happens."
Late yesterday. New Jersey Turnpike Authority 6.90s of 2014 were quoted at 99 5/8-7/8 to yield 6.90%. NEw York LGAC 7s of 2021 were quoted at 98 5/8-7/8 to yield 7.09%, while New York LGAC 7s of 2016 were quoted at 98 3/4-99 1/4 to yield 7.06%. Puerto Rico Electric Power Authority 7s of 2021 were quoted at 100-100, where they returned 6.99%. And Colorado River Authority insured 6 5/8s of 2021 were quoted at 97 3/4-7/8 to yield 6.79%.
In the debt futures market, the December municipal contract settled down 2/32 to 93.29 with the December MOB spread calculated at negative 157.
Earlier in the week, much of the product out for the bid had not been trading and yields were rising nationally.
"There's been a lot out for the bid and the individual investor and trust departments were not buying," said one Chicago-based trader.
Off the run names had slid as much as 20 basis points, national traders said, and buyers were balking and eyeing interest rates.
The Blue List totaled $1.29 billion yesterday, an increase of $53 million from the previous session, and up $207 million from last Thursday.
The primary market was quiet yesterday, as new issue activity tapered off from heavier volume earlier in the week.
In negotiated activity, Dillon Read & Co. as senior manager tentatively priced and repriced $180 million Delaware Transportation Authority Transportation system senior revenue bonds to lower yields by five basis points in 2016 and add a 2014 maturity.
The final terms included serials priced to yield from 4.60% in 1992 to 6.55% in 2006.
A 2011 term, containing $44 million of the loan, is priced to yield 6.70%; a 2014 term is priced to yield 6.68%, and a 2016 term is priced to yield 6.63%.
The bonds are rated A1 by Moody's Investors Service and AA-minus by Standard & Poor's Corp.
In competitive new issue activity, $170 million San Freancisco, city and county, Calif., general purpose sewer revenue bonds were won by a Merrill Lynch & Co. group with a Canadian interest cost of 6.626%.
Merrill was awarded the bonds late in the session after working out a technical problem with the bid, and reported an unsold balance of $54.7 million near the close.
A Merrill Lynch officer said that the long bonds went to managed bond funds, while property and casualty companies took maturities from 1997 to 2001. There were bonds remaining in the intermediate range and the officer said that retail demand was increasing near the end of the day.
The issue was priced to yield from 5% in 1994 to 6.55% in 2012.
A 2016 term, containing $34 million of the loan, was priced as 6 1/2s to yield 6.60%, and a 2021 term, containing $58 million of the loan, was not formally reoffered to investors.
The bonds are rated A by Moody's and A-plus by Standard & Poor's, except for the 2004-2012, 2016, and 2021 maturities, which are insured by MBAC Indemnity Corp. and rated triple-A by both Moody's and Standard & Poor's.
In other primary action, Alex. Brown & Sons, senior manager for $180 million New Orleans, Louisiana GO bonds, freed the issue from syndicate restrictions in the afternoon.
In secondary trading, the 2021 maturity was quoted trading at a 6.80% net yield, where it was originally priced to yield 6.85%. The zero coupon bonds were also trading higher in price, with the 2018 maturity quoted at 7.05%, where it was originally priced to yield 7.15%.
In the prerefunded bond sector, yields have risen about 10 basis points on large blocks and 20 basis points on off the run items from last Friday's closing levels. Last Friday, prerefunded bonds callable in 1995 were quoted around 5.38% bid, 5.35% offered, and yesterday 1995 prerefundeds were quoted around 5.48% bid, 5.46% offered.
Meanwhile, short-term note yields were unchanged to five basis points lower on the day.
In late secondary trading, Pennsylvania 5 1/4% Tans were quoted at 4.67% bid, 4.64% offered, while Texas 5% Trans were quoted at 4.55% bid, 4.50% offered. Los Angeles notes were quoted at 4.60% bid, 4.50% offered, while New Jersey notes were quoted at 4.60% bid, 4.55% offered in thin trading. March New York State Trans were quoted at 5.17% bid, 5.15% offered.
An issue of $23 million Maine State Housing Authority mortgage purchase bonds was tentatively priced by Goldman, Sachs & Co., and later repriced to lower yields five to 10 basis points.
The final terms included serials priced at par to yield from 5.00% in 1993 to 6.30% in 2002.
A 2016 term was priced at par to yield 7.10%.
There were capital appreciation bonds priced to yield from 6.60% in 2003 to 6.85% in 2008.
The issue is expected to be rated A1 by Moody's and is rated A-plus by standard & Poor's.
Bear, Stearns & Co. as senior manager priced $48.5 million Pennsylvania Higher Education Assistance Agency student loan adjustable rate tender revenue bonds as a remarketing.
The issue is priced as 7.05s at par in 2016.
The issue is insured by AMBAC and rated triple-A by both Moody's and Standard & Poor's.