CREDIT MARKETS

Treasuries:Treasury prices rallied Monday, sending yields lower, as investors bought up long-dated securities ahead of expectations the Federal Reserve could soon buy Treasuries, with another round of dismal economic news also supporting bids. Demand for Treasuries pushed yields on debt maturing in 10 years or more closer to those of shorter-term notes for a third day as traders bet the Fed will commit to keeping long term borrowing costs low. Treasuries on Monday also benefited from investors’ appetite for safe-haven assets after reports emerged of widespread investment losses from the alleged Ponzi scheme run by Bernard Madoff. The Fed opened a two day meeting as policy makers consider whether to lower interest rates or pursue other measures as a way of spurring economic growth in the worst financial crisis since the Depression. The difference in yield between two and ten year notes, was 1.78 percent compared with 1.81 percent on December 12th. Tomorrow has CPI and housing starts/building permits along with the FOMC decision.

Municipals: U.S. state and local government borrowers plan to offer about $2 billion of bonds this week. Florida Water Pollution Control Financing Corp. will be among the largest issuers with a $201 million AAA bond sale to help pay for work on local wastewater systems. Philadelphia took orders from individual investors on its $185 million in GO bond offering. Institutional pricing is on Tuesday. Yields on even the highest rated 30-year general obligation bonds reached 5.58 percent, about 2.8 percentage points more than the comparable-maturity taxable Treasury benchmark. I was in touch with PR FSA at 6.25-6.20, PR AGO insured 5.50 29 at 6.80-6.75. I was posted on CA 5% 9/19 @ 5.60, Dorms 5% 2/24 @ 6.15, PR Infrac 5 ½ % 7/19 @ 7.40. The MMD was unchanged from Friday’s close.

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Commentary/New Issues
Corporate: $1.25 BLN, United Technologies, 6.125%, 2/1/19, A2/A, +360bp
$2.0 BLN, Proctor & Gamble, 4.60%, 1/15/14, Aa3/AA-, +310bp
ABS:Nothing
Agency: Nothing
New Issues larger than $250mm. The fixed income offerings mentioned above are for informational purposes only. Toussaint Capital Partners, LLC, member NASD/SIPC, and/or its affiliates may be a participant in the offerinmentioned and therefore offerings will be subject to availability.
All statistical data is sourced from Bloomberg Financial Markets

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