CREDIT MARKETS
Treasuries:
Treasury prices declined Wednesday, nudging yields higher, after the government received solid demand for its $18 billion in 10-year notes. The government sold the 10-year securities at a yield of 3.043 percent. The bid/cover ratio was 2.14, compared with 2.211 at the February 11th auction, the lowest since last March. Indirect bidders bought 23.9 percent of the amount sold, compared with 37.8 percent in the prior auction. Direct bidders, investors bidding for their own accounts, took another 3.1 percent of the sale—about 10 times the average at reopenings. The Treasury will finish off its schedule of debt auctions for the week on Thursday, putting $11 billion in 30-year bonds up for sale. As with the 10-year auction, the 30-year auction will be a reopening. For the 30-year bonds, it will be the first reopening a month after the original issue. The U.S. federal government budget widened to $192.8 billion in February as tax receipts plunged to the lowest level in 14 years. Economic new for tomorrow will focus on initial jobless claims and retail sales less autos.
Municipals:
The University of Pittsburgh and Pennsylvania will be among today’s largest U.S. municipal borrowers, with benchmark 10-year yields at an eight-week high. Pitt, one of Pennsylvania’s four state-related universities that get public funding while keeping independent control, plans to sell $427 million of revenue bonds through BarcThe District of Columbia expanded by 80 percent to $800 million its inaugural sale of bonds secured by income taxes as the U.S. capital tapped into demand for a new security with a top Standard & Poor’s rating. Washington, D.C., sold one of the week’s two largest tax- exempt offerings yesterday, a day sooner than planned. The average interest rate was 4.84 percent. The district government wants to obtain lower interest costs in coming years by borrowing as much as $3 billion against a pledge of its personal and business income taxes, instead of selling the lower-rated general obligation bonds. Washington was joined in the municipal market yesterday by Oregon and California, which also moved up their sales of revenue bonds previously set for today. The University of California plans to begin an $800 million bond sale today, taking orders from retail buyers through Barclays Plc. Yields on AAA general obligation bonds due in 10 years rose two basis points to 3.54 percent yesterday, the highest in eight weeks. In the past few weeks, we have seen an uptick in supply and there are expectations for more supply. A lot of issuers were waiting to see what support was coming from the federal government in the Obama administration’s stimulus package enacted last month. The final read on MMD was as follows 2010-2013: yields were unchanged; 2014-2016: yields were lower by 1bp; 2017: yields were lower by 2bp; 2018: yields were lower by 4bp; 2019: yields were lower by 2bp; 2020-2039: yields were unchanged.
Commentary/New Issues
Corporate:
$550 MM, Eaton Corp., A3/A, 2 part $250 MM, 5.95%, 3/20/14, +400bp; $300 MM, 6.95%, 3/20/19, +410bp
$500 MM, Walt Disney, 5.50%, 3/15/19, A2/A, +262.5bp
$500 MM, Florida Power & Light, 5.96%, 4/1/39, Aa3/A, +220bp
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 offering mentioned and therefore offerings will be subject to availability.
All statistical data is sourced from Bloomberg Financial Markets.