Municipal prices were unchanged in light trading yesterday, but investors bought bonds near the takedown from a $1.6 billion New Jersey Turnpike issue.
Thanksgiving's proximity made for quiet secondary-market trading yesterday, but dealers reported follow-through business from last week's $6.7 billion new-issue slate.
To date, long-term municipal bond volume totaled $147.93 billion this year, a 34% jump from last year's total of $110.41 billion for the same period.
Volume from Nov. 1 through 22 of this year totaled $14.2 billion, more than double 1990's $7.03 billion. Preliminary figures show that the monthly total is the highest since 1985's $31.71 billion, when issuers rushed to market to beat the Tax Reform Act of 1986.
Looking ahead, The Bond Buyer's 30-day visible supply rose $344 million yesterday, to $2.59 billion.
Secondary-market supply has increased, with Standard & Poor's Corp.'s The Blue List of dealer inventory climbing $19 million yesterday, to $1.58 billion.
Traders reported plenty of bonds around and expected yields to dip slightly as the market digests supply.
In follow-through business in the primary sector yesterday, Merrill Lynch & Co., senior manager for $1.6 billion of New Jersey Turnpike Authority turnpike revenue bonds, freed the bonds from syndicate restrictions.
In secondary-market trading, the noncallable bonds of 2008 and 2009 were faring well, but traders said term bonds were changing hands about five basis points cheap to original reofferings, or right around the takedown. Term bonds were originally priced to yield 6.73%, but were quoted late yesterday at 6.78%.
One trader noted that most of the volume in new deals was concentrated on the long end. With a 200-basis-point spread between two-year municipal note yields and long-term bonds, investors are likely to move out along the curve.
"There's not as much supply in the three-to 10-year range," a Philadelphia-based trader said. "People will continue to be encouraged to move out along the yield curve until we take some of the steepness out of it."
In other follow-through business, Morgan Stanley & Co., senior manager for $225 million of New York State full faith and credit various purpose bonds, reported an unsold balance of $52 million.
Morgan also reported an unsold balance of $19 million on a Washington Suburban Sanitary District, Md., issue.
Lehman Brothers, senior manager for 97 million of Nassau County, N.Y., general obligation bonds, reported an unsold balance of $14 million.
Traders in the secondary market reported a bid-wanted list totaling around $100 million of mostly intermediate-range bonds, but activity was light otherwise because of the holiday.
Sources said a $10 million block of New Jersey Turnpike 7.20s of 2018, now prerefunded, traded and were reoffered at 105 5/8-7/8 to yield 4.53% to the par call.
Prices were narrowly mixed in secondary dollar bond trading.
Pennsylvania Turnpike Authority 6 1/2s of 2013 were quoted at 96 3/8-5/8 to yield 6.80% and Washington Public Power Supply System 6 7/8s of 2017 were quoted at 98 5/8-99 to yield 6.95%. Massachusetts Water Resource Authority 6 1/2s of 2019 were quoted at 93 7/8-94 1/8 to yield 6.98%.
The municipal note market was quiet yesterday, and traders reported thin supply and bids largely unchanged from last week.
Traders said they expect the municipal money market to heat up early in December after coupon payments the first of the month. But the short end of the municipal market, in contrast to the long end, is suffering from a dearth of paper, sources said.
"There really hasn't been any issuance of notes in a long time," one trader said. The amount of secondary-market activity early next month will depend, the source said, on the propensity of investors to reinvest coupon payments.
In late secondary-market trading, Los Angeles Trans were quoted at 4.09% bid, 4.03% offered. March New York State Trans were quoted at 5.25% bid, 5.10% offered, and New York City Rans were quoted at 5.25% bid, 5.10% offered. Texas notes were quoted at 4.05% bid, 4.02% offered in late cash trading.
In prerefunded bond trading, bonds with national names, callable in 1995, were quoted late in the session at 5.13% bid, 5.10% offered, while bonds callable in 1996 were quoted at 5.18% bid, 5.15% offered.
John Nuveen & Co. tentatively priced $65 million of New Hampshire Housing Finance Authority multifamily housing refunding bonds.
The offering included Series 1 and 2 bonds tentatively priced to yield from 4.75% in 1992 to 6.75% in 2003, 6.95% in 2006, and 7.05% in 2014.