Market Post: Munis Lower Ahead of New Supply

NEW YORK – The tax-exempt market is slightly lower Tuesday morning ahead of several large deals that are expected to be priced. Munis followed Treasuries lower.   “Munis are down a smidge,” a New York trader said. “Some people are hitting bids, but it’s nothing too exciting.”   He added the bid today is helping move the market, unlike on Monday when there seemed to be no participants. “There is no use cutting bonds a ton if there’s no bid.”   The Municipal Market Data scale was not updated by press time. On Monday, the 10-year yield ended flat at 1.86% for the seventh consecutive trading session while the two-year ended steady at 0.32% for the 17th straight session. The 30-year yield finished flat at 3.16%.   Treasuries were weaker after a stronger session Monday. The benchmark 10-year yield rose three basis points to 1.64% while the 30-year yield increased two basis points to 2.71%. The two-year rose one basis point to 0.32%.   In the primary market, Citi is expected to price for institutions $1.14 billion of New York State Thruway Authority general revenue bonds, rated A1 by Moody's Investors Service and A-plus by Standard & Poor's.   In retail pricing Monday, yields ranged from 0.94% with 3% and 4% coupons in a split 2015 maturity to 4.00% priced at par in 2037. Bonds maturing between 2024 and 2026, between 2028 and 2031, and in 2042 were not offered for retail. Credits maturing in 2014 were offered via sealed bid. The bonds are callable at par in 2022.   Morgan Stanley is expected to price $500 million of Long Island Power Authority electric system general revenue bonds in two series, each of $250 million.   JPMorgan is expected to complete pricing of $196 million of Texas A&M University System Board of Regents bonds, backed by the triple-A rated Permanent University Fund. On Tuesday, $71 million of tax-exempt refunding bonds are expected to be priced following a $125 million taxable issue Monday.   Citi is expected to price $155 million of Dormitory Authority of the State of New York North Shore Long Island Jewish Hospital taxable and tax-exempt bonds.   In the competitive market, Seattle is expected to auction $350.6 million of revenue bonds in three pricings – including $298.2 million, $9.4 million, and $43 million. The bonds are rated Aa2 by Moody’s and AA-minus by Standard & Poor’s.   Minnesota’s Metropolitan Council is expected to auction $215.9 million of general obligation bonds