CREDIT MARKETS
Treasuries:
Treasury prices gained Thursday, pushing yields down, as plenty of buyers showed up for the government’s 30-year bond auction, its last debt sale of the week. The Treasury Department sold $11 billion in 30-year bonds at a yield of 3.640 percent. This was less than traders had expected, based on trading just before the auction. The sale marked the first time the government has tried reopening the so-called long bond a month after the initial sale. In a reopening, the debt for sale carries the same coupon and maturity as the original bonds. Investors bid $2.40 for every dollar available, compared to $2.30 at the last five reopenings. Indirect bidders, bought 46.2% of the sale, the highest since February 2006, when the Treasury resuming issuing the securities after a five-year hiatus. Direct bidders took another 9.8 percent, also considerably more than usual.
Reopening 30-year bonds is one of many steps the government has had to take lately to increase issuance to finance all the stimulus spending, tax breaks, and the Federal Reserve’s liquidity initiatives aimed at restarting U.S. economic growth and financial markets. Economic news tomorrow will focus on trade balance and University of Michigan Confidence.
Municipals:
The University of California raised about $800 million today to finance projects around its 10-campus system and to refinance debt, driving fixed-rate bond sales in the municipal market to the highest in eight weeks.
The university, sold revenue bonds through Barclays Plc at yields ranging from 1.15 percent on notes due next year to 5.57 percent on 30-year debt. States, cities, colleges and other tax-exempt issuers have sold at least $6.6 billion in bonds this week, the most since mid-January, based on preliminary data compiled by Bloomberg. The municipal market has benefited in part from a three-day stock market rally led by financial companies such as Citigroup Inc. and Bank of America Corp., which said they were profitable in January and February. If you can improve the backdrop for investing in general, that can help munis. After what we’ve been through the last 12 months, if you get a sense the sea is calm, you want to put out to sea. Yields on AAA 15-year general obligation bonds held the past two days at 4.49 percent, the highest in almost nine weeks. The final read on the MMD was 2010-2032: yields were unchanged; 2033-2039: yields were higher by 1bp.
Commentary/New Issues
Corporate:
$1.0 BLN, Valero Energy, Baa2/BBB, 2 part $750 MM, 9.375%, 3/15/19, +650bp; $250 MM, 10.50%, 3/15/39, +687.50bp
$500 MM, Sysco Corp., A1/A, 2 part $250 MM, 5.375%, 3/17/19, +260bp; $250 MM, 6.625%, 3/17/39, +315bp
ABS:
$1.5 BLN, SLM Private Education Loan Trust 09-A
Agency:
$9.0 BLN, Fannie Mae, 2.750%, 3/13/14, +90bp
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