New issues in the tax-exempt market were well-received as many deals were oversubscribed and Tuesday's heavy calendar did not appear to push yields higher.
"Bonds prices remain robust and there were no weakening in spreads," a trader in New Mexico said. "Most deals are being bought up with oversubscription levels so there are plenty of orders for bonds. Deals are oversubscribed so it's not so easy to extract value."
In the secondary market, "trading has been light to selective" a trader in New York said. There were a lot of bid-wanteds from a wide range of customers, but "people are just being selective at what they're looking at."
Earlier in the day, a second trader in New York said municipals were a bit weaker. "Munis are off with the Treasury market," he said, adding, "Tuesday is usually a day for new issues."
Munis were mostly steady, according to the Municipal Market Data scale. All yields were unchanged except for yields on the six- to nine-year maturities, which rose one basis point.
On Tuesday, the two-year muni closed at 0.42% for its 19th consecutive trading session. The 10-year and 30-year closed flat at 2.22% and 3.79%, respectively.
Treasuries were choppy but ended weaker than on Monday. The benchmark 10-year yield finished up four basis points to 2.01% while the 30-year yield closed up five basis points to 2.98%. The two-year finished steady at 0.27%.
In the primary market, Citi priced for retail $1 billion of Puerto Rico Sales Tax Financing Corp. sales tax revenue bonds. The credit is rated Aa2 by Moody's Investors Service and AA-minus by Standard & Poor's and Fitch Ratings.
Yields on the first series, $919.5 million of current interest bonds, ranged from 3.21% with a 4% coupon in 2020 to 5% priced at par in 2046. Credits maturing in 2040 were not offered for retail. The bonds are callable at par in 2021.
The second series, $92.6 million of capital appreciation bonds, had maturities ranging from 2034 to 2041. The bonds were priced from 6.24% to 6.30% yield to maturity.
Goldman, Sachs & Co. priced for retail $454 million of Connecticut special tax obligation bonds. The bonds are rated Aa3 by Moody's and AA by Standard & Poor's and Fitch.
Yields on the first series, $220.6 million of special tax obligation bonds for transportation infrastructure, ranged from 0.52% with a 5% coupon in 2013 to 3.85% and 3.88% with 3.875% and 5% coupons in a split 2031 maturity. Credits maturing between 2024 and 2025, and 2028 to 2030, were not offered for retail. The debt is callable at par in 2021.
Yields on the second series, $233.4 million of special tax obligation refunding bonds for transportation infrastructure, ranged from 0.52% with 2% and 3% coupons in a split 2013 maturity to 2.95% with a 4% coupon in 2023. Credits maturing in 2012 were offered via sealed bid. The debt is callable at par in 2021.
Ramirez & Co. priced for retail $483.7 million of New York's Metropolitan Transportation Authority revenue bonds. The bonds are rated A2 by Moody's and A by Standard & Poor's and Fitch.
Yields ranged from 1.02% with 2.5% and 3% coupons in a 2013 split maturity to 4.875% price at par in 2046. Credits maturing in 2012 were offered via sealed bid. Debt maturing in 2024, 2025, 2027 to 2029, 2031 and 2041 were not offered for retail. The bonds are callable at par in 2021.
On Tuesday, Moody's issued a report on the MTA's 2010-to-2014 capital plan, which faces challenges regarding infrastructure maintenance and expansion needs. Analyst Nicole Johnson said in the report that the authority plans to increase its borrowing for capital purposes, which will result in further leveraging of the existing and future resources.
"As currently projected, debt service costs will increase only slightly relative to the budget, and are consistent with the A2 rating on the MTA's transportation revenue bonds," Johnson wrote. "The outlook is stable reflecting our expectation that the MTA will continue to take action to balance its operations while absorbing the increased debt load."
However, Johnson noted that risks include reduced federal funding, which could lead to increased debt issuance. "These factors could create negative pressure on the MTA's" transportation revenue bond ratings, he said.
In other big deals this week, JPMorgan is expected to price $700 million of New York Liberty Development Corp. revenue bonds Wednesday.
In the secondary market, trades reported by the Municipal Securities Rulemaking Board Tuesday showed weakening.
Bonds from an interdealer trade of Washington 5s of 2022 yielded 2.65%, five basis points higher than where they traded last week.
A dealer bought from a customer New Jersey Transportation Trust Fund Authority 5.25s of 2026 at 4.19%, three basis points higher than where they traded last week. A dealer sold to a customer Massachusetts School Building Authority 5s of 2030 at 2.73%, 24 basis points higher than where they traded last week.
A dealer sold to a customer New York City 5s of 2024 at 3.27%, five basis points higher than where they traded last week.
In economic news, the consumer confidence index jumped to 56.0 in November from a revised 40.9 in October, the Conference Board said. Economists polled by Thomson Reuters had estimated the index would be 43.0.
"The rebound in confidence and the improvement in consumers' assessment of the labor market were sharper than we were anticipating," economists at RDQ Economics wrote. "If we average the last two monthly readings together, we still get a confidence reading that is modestly above the readings seen in August and September."
