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Update on Current Conditions in the Credit Markets
(May 6, 2013)
General Market News
 According to a report released by the Labor Department Friday (5/3) U.S. employment rose more than expected in April,
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pushing the unemployment rate to a four-year low of 7.5%
– Following the strong U.S. jobs report, the Dow Jones Industrial Average and Standard & Poor’s 500 index both rose to
record highs as U.S. Treasury and Municipal bond prices fell (yields decreased)
On Friday (5/3), the Commerce Department reported new orders for manufactured goods dropped 4% in march
–
New orders slipped $19.5 billion to $467.3 billion; the largest drop since August 2012
The Institute for Supply Management reported Friday (5/3) that the U.S. services sector expanded at a slightly slower pace in
the month of April as the non-manufacturing business activity composite index was 53.1% for the month, compared to
54.4% in March
On Thursday (5/2), the European Central Bank cut its main interest rate by 25 basis points to 0.5%, which marks a new
record low for the 17 European Union Countries that use the euro
The Federal Open Market Committee released a statement on Wednesday (5/1) saying the Federal Reserve will continue
open-ended programs to purchase longer-term Treasuries at a rate of $45 billion per month and mortgage-backed securities at
a $40 billion per month
– The Federal Open Market Committee also decided to keep the target range for the federal funds rate at zero to 0.25%
Reported on Wednesday (5/01), the U.S. Manufacturing Purchasing Managers Index slipped to 52.1% from 54.6% in March,
which is the lowest final reading since October (2012), as U.S. manufacturing growth pulled back to its slowest pace in six
months
U.S construction spending dropped to a seven-month low in March as public outlays recorded their largest drop since 2006;
the Commerce Department said on Wednesday (5/1), that construction spending fell 1.7% to an annual rate of $856.72
billion, the lowest level since August (2012)
The Commerce Department said on Monday (4/29), that consumer spending advanced 0.2% last month after an unrevised
0.7% increase in February
The National Association of realtors announced on Monday (4/29) that its Pending Sales Index, based on last month’s
contracts signed to purchase previously owned homes, rose 1.5% to 105.7%, as the housing market continues to accelerate
this year
Municipal Fixed Rate Market
 10-year Treasury closed at a 1.78% on Friday, up from last week’s close of 1.70% and the 30-year Treasury closed at a 2.96%,
up from last week’s close of 2.87%
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10-year MMD closed at a 1.68% on Friday, slightly down from last week’s close of 1.69% and the 30-year MMD closed at a
2.82%, down from last week’s close of 2.87%
Maturity
1-year
5-year
10-year
15-year
20-year
30-year
Historical
Low Since 6/1/1981
0.18
0.62
1.47
1.80
2.10
2.47
MMD
Close
Prior
(5/3) Week (4/26)
0.20
0.20
0.73
0.74
1.68
1.69
2.23
2.28
2.53
2.58
2.82
2.87
Since 7/1/2004
Weekly
Change (bps)
-1
-1
-5
-5
-5
Min
Max
51.75
58.80
75.07
80.99
81.96
82.74
333.33
229.46
190.45
215.36
221.82
212.27
MMD – US Treasury Ratio
Rolling 1-year
Current Prior Week
Avg
Avg
(5/3)
(4/26)
104.92
127.47
185.19
183.49
88.31
102.81
100.00
105.71
91.80
101.86
96.55
100.59
101.03
110.61
108.36
115.27
104.21
110.10
107.16
113.33
101.22
101.10
95.59
100.35
*New low
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As reported by the Bond Buyer, municipal issuers came to market last week with a total of about $5.52 billion
According to Lipper FMI, municipal bond mutual funds reported $391 million of net outflows in the week ended 5/1
–
This marks the ninth consecutive week, the longest stretch since mid-2011, equally a total of $2.5 billion
Municipals improved 2-8 basis points early in the week but gave back some gains after Friday’s employment report
Municipals substantially outperformed Treasuries on Friday as the 30-year Treasury bond was weaker by 14 basis points and
MMD was cut by 3 basis points
The primary market had another strong week, led by the $1.1 billion Iowa Fertilizer deal; the bonds traded up by more than
30 basis points in secondary trading
5/6/2013 4:43 PM
Municipal Fixed Rate Market
Visible Supply
 As reported by TM3, the 30-day tax-exempt visible supply is approximately $6.73 billion
– The maximum visible supply over the last 60 days was $13.84 billion, while the minimum was $5.34 billion and the
average was $9.19 billion
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Municipal bonds to be sold this week are estimated to total $4.97 billion
– $3.03 billion negotiated
– $1.93 billion competitive
Top Municipal Bond Transactions for the Week of 5/06 (in excess of $50 million)
Preliminary
Size ($000)
300,000
202,280
190,000
187,940
169,290
156,715
152,365
147,000
142,120
137,000
130,710
127,605
117,000
92,895
92,550
90,480
82,995
69,715
68,530
67,830
59,250
58,650
55,150
51,700
50,000
50,000
Issuer
Build Illinois Bonds, IL
Regional Transportation District Sales Tax Ref (Fastracks Project)
City Of Houston, TX Combined Utility System First Lien Rev & Ref Bonds
Massachusetts Water Poll State Revolving Fund Bonds, MA
Louisiana Taxable General Obligation Bonds
Beacon Health System, IN; Indiana Finance Authority Hospital Rev & St. Joseph County Hospital Rev
Illinois Finance Authority Rev Bonds, The University Of Chicago
Maryland Health & Higher Educational Facilities Authority Rev Medstar Health Issue, MD
Cypress-Fairbanks, TX Independent School District Ref Bonds
Sonoma County, CA Junior College District General Obligation Ref Bonds 2013
Louisiana General Obligation Bonds
Illinois Housing Development Authority Housing Bonds, IL
Massachusetts Housing Finance Agency Housing Bonds (Non AMT), MA
Virginia Resource Authority, Infrastructure Rev Bonds, VA
Pima County, AZ Certificates of Participation
Northside Independent School District, TX Variable Rate School Building Bonds
Metropolitan School District of Warren Township Vision School Building Corporation, IN Ref Bonds
Charleston County, SC General Obligation Transportation Sales Tax Ref Bonds
Desert Sands Unified School District Riverside County, CA Ref Series
Mcallen Independent School District Texas Unlimited Tax Ref Bonds Series 2013A
Lafayette, IN Sewage Works Ref & Rev
Bloomfield Hills Schools County Of Oakland, MI School Building And Site Bonds
Seattle, WA Limited Tax General Obligation Improvement & Ref Bonds
Rhode Island Health & Educational Building Corporation, RI University Of Rhode Island
Seattle, WA Unlimited Tax General Obligation Improvement Bonds
Metropolitan Transportation Authority, NY Transportation Rev Bonds
Structure
TAX
TE
TE
TE
TAX
TE
TE
TE
TE
TE
TE
TAX
TE
TE
TE
TE
TAX
TE
TE|TAX
TE
TE
TE
TAX
TE
TE
TE
Neg vs.
Comp
Comp
Neg
Neg
Comp
Comp
Neg
Neg
Neg
Neg
Neg
Comp
Neg
Neg
Neg
Neg
Neg
Neg
Comp
Neg
Neg
Neg
Neg
Comp
Neg
Comp
Comp
Build America Bonds (“BABs”)
 The following are the BAB secondary market spreads as of close Friday (5/3):
Transaction
Sale Date
Ratings
Selected Maturity
Call Provisions
Initial Taxable Yield (%)
Initial Spread to Treasury (bps)
Current Spread to Treasury (bps)
Initial Tax-Exempt Equivalent Yield(%)1
Initial Spread to MMD (bps)1
Current Spread to MMD (bps)1
1Tax-Exempt
State of California
11/19/2010
A1/A-/A2040
Non-Callable
7.600
+325
+145
4.94
31
7
University of Texas
6/10/2009
Aaa/AAA/AAA
2039
Make-Whole + 20bps
5.262
+100
+70
3.42
(62)
(40)
City of Chicago
1/11/2010
Aa3/A+/AA2036
Make-Whole +25bps
6.207
+150
+230
4.03
37
74
Equivalent Yield takes into account the 35% interest-cost rebate from the U.S. Treasury
Municipal Variable Rate Market
 SIFMA reset at a 0.19%, 95.86% on a day count adjusted basis of 1-month LIBOR (0.198%) and 69.57% on a day count
adjusted basis of 3-month LIBOR (0.273%)
Disclaimer
All information and opinions expressed in this document were obtained from sources believed to be reliable and in good faith, but no representation or warranty, express or implied, is made as to its accuracy or
completeness. All information and opinions as well as any prices indicated are currently only as of the date of this report, and are subject to change without notice. Any estimations or projections as to events that may
occur in the future (including projections of market performance) are based upon the best judgment of Siebert Brandford Shank & Co., L.L.C. ("SBS") from publicly available information as of the date of this
report. There is no guarantee that any of these estimates or projections will be achieved. SBS expressly disclaims any and all liability relating or resulting from the use of this report.
5/6/2013 4:43 PM