NEW YORK - Municipals gained through early afternoon while underwriters repriced $280 million Pennsylvania Turnpike Commission revenue bonds lowering yields two, three and five basis points depending on the maturity.
Treasuries were mostly higher while equities also gained. On the economic front, May consumer confidence index rose to 93.2 from 93.0 last month while April existing home sales increased 2.5% to a 6.64 million rate.
Mark Vitner, senior economist at Wachovia Corp., said the consumer confidence report was largely in line with expectations, but some index components raised questions about the extent of the labor market improvement.
A big surprise there is that after two fairly strong months of job growth, the number of people that still believe that jobs are hard to get has risen to a highest level since December, he said. What that tells me is that improvement in the labor market is not reaching as many people as one would believe.
In recent trading, the two-year Treasury note was quoted unchanged to yield 2.52%, the 10-year note was quoted up 1/32 to yield 4.73% and the 30-year bond was quoted up 4/32 to yield 5.42%.
Municipal bond yields fell roughly two basis points while traders reported broad-based interest from investors. Firmness in the government market provided underlying support to tax-exempts.
Even with improvement in institutional demand, traders said some bonds were not finding their way to end users.
There seem to be a lot of blocks trading and then theyre coming back, a trader in Chicago said. Because the primary market is much cheaper than the secondary it makes it tougher for bonds to go away.
Meanwhile, traders reported availability of June 1 reinvestment cash had generated increased demand from retail investors, which, traders said, indicated there was stability in the market.
Theres always an inherent risk of something goofy happening in the Middle East, another trader in Chicago said. But it seems like the market has found a floor, at least for the time being.
In the new issue market, J.P. Morgan Securities repriced $280 million Pennsylvania Turnpike Commission revenue bonds, lowering yields two, three and five basis points depending on maturity.
The final scale comprised serials priced to yield from 4.61% in 2018 to 4.97% in 2024. Bonds due in 2029 were priced as 5s to yield 5.13%, while a 2031 maturity was priced as 5 1/2s to yield 4.98%. Bonds due in 2032 were priced as 5 1/4s to yield 5.17%, while a 2034 maturity was priced as 5s to yield 5.18%.
The issue is insured by Ambac Assurance Corp. and carries underlying ratings of Aa3 by Moodys Investors Service and AA-minus by Standard & Poors and Fitch Ratings.
Bonds were priced at a spread as tight as five basis points over Municipal Market Datas Monday triple-A yield curve scale and as wide as 13 basis points over the scale.
Meantime, Lehman Brothers repriced $228 million pollution control refunding revenue bonds issued by the cities of Burlington and Wamego, Kan., on behalf of Kansas Gas and Electric Company, lowering yields by five basis points
Series 2004A and B contained $109 million term bonds due in 2031 priced at par to yield 5.30% and $100 million put bonds repriced at par to yield 2.65%.
Series 2004 bonds contained $19 million term bonds due in 2031 priced at par to yield 5.30%.
The issue is insured by MBIA Insurance Corp. and carries underlying ratings of Ba1 from Moodys, BB-plus from Standard & Poors and BBB-minus from Fitch.
In the competitive sector, Citigroup Global Markets won $130 million Massachusetts Water Resources Authority general revenue bonds with a low interest cost of 5.05%.
Serials were reoffered at yields ranging from 1.74% in 2005 to 5.13% in 2028. Bonds due in 2018, 2019, 2023 through 2026 and in 2029 were not formally reoffered.
Excluding a 2005 maturity, the issue is insured by MBIA and carries underlying ratings of AA-minus from Fitch.
Bonds due in 2005 through 2017 yielded the same as Municipal Market Datas Monday triple-A yield curve scale, while bonds due in 2020 through 2022 yielded seven basis points more and bonds due in 2027 and 2028 yielded eight basis points more.
Back in the negotiated sector, A.G. Edwards & Sons repriced $88 million San Antonio, Texas, water system revenue and refunding bonds, lowering yields by two, three and four basis points depending on maturity.
The final scale contained serials priced to yield from 2.68% in 2007 to 5.20% in 2026. A 2029 maturity was priced as 5 1/8s to yield 5.21% and bonds due in 2034 were priced as 5 1/8s to yield 5.23%.
The issue in insured by Financial Guaranty Insurance Co. and carries underlying ratings of Aa3 from Moodys and AA-minus from Standard & Poors and Fitch.
Earlier, Lehman Brothers opened a retail period on $406 million Massachusetts Bay Transportation Authority assessment bonds ahead of institutional pricing Wednesday.
Serials were priced to yield from 1.52% in 2005 to 5.07% in 2025. A 2034 maturity was priced as 5.15s to yield 5.18%, while bonds due in 2029 were not offered during the retail order period.
The issue is rated Aa1 by Moodys and AAA by Standard & Poors.
Serials were priced five to 10 basis points over Municipal Market Data Mondays triple-A yield curve scale.
Looking ahead to new issue volume, The Bond Buyer's 30-day visible supply calendar fell $86 million to $7.66 billion. The total comprises $1.71 billion of competitive loans and $5.95 billion in negotiated issues.
Disclosure
The Municipal Securities Rulemaking Board reported 31,779 trades Monday, comprising 13,498 separate issues. Of all bonds traded, 1,795 changed hands at least four times. Most active was California economic recovery MBIA-insured 5s of 2012. The bonds traded 109 times at a high of 107.138 and a low of 107.088.
