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Market Post: Munis Steady as Trading Slows

The tax-exempt market continued to trade steady Thursday afternoon as traders said there was not a lot of action to move it in any direction.

"It's steady and the market is trading very heavy," a Chicago trader said. "There is undesirable inventory. Certain names and certain structures are undesirable and unless there is something good, it's not moving."

He added there is money waiting to be put to work but at these yield levels, traders are more picky. "Spreads are so tight that it's just not a move for anyone."

In the primary market, Bank of America Merrill Lynch priced $460 million of bay Area Toll Authority San Francisco bay area toll bridge revenue bonds, Bay Area Toll Bridge revenue SIFMA index bonds, rated Aa3 by Moody's Investors Service, AA by Standard & Poor's, and AA-minus by Fitch Ratings.

The first series of $50 million matures in 2047 and was priced 70 basis points above the SIFMA index. The bonds are callable at par in 2019.

The second series of $100 million matures in 2047 and was priced 70 basis points above the SIFMA index. The bonds are callable at par in 2019.

The third series of $110 million matures in 2045 and was priced 110 basis points above the SIFMA index. The bonds are callable at par in 2023.

The fourth series of $50 million matures in 2045 and was priced 110 basis points above the SIFMA index. The bonds are callable at par in 2023.

The fifth series of $150 million matures in 2036 and was priced 125 basis points above the SIFMA index. The bonds are callable at par in 2026.

In the competitive market, Bank of America Merrill Lynch won the bid for $200 million of Kansas Department of Transportation highway revenue bonds, rated Aa1 by Moody's Investors Service, AAA by Standard & Poor's, and AA-plus by Fitch Ratings.

Yields ranged from 0.45% with a 5% coupon in 2015 to 2.36% with a 4% coupon in 2032. The bonds are callable at par in 2022.

Wells Fargo Securities won the bid for $155.3 million of Massachusetts State College Building Authority project revenue bonds, rated Aa2 by Moody's and AA by Standard & Poor's.

Yields ranged from 0.36% with a 5% coupon in 2014 to 3.157% with a 3% coupon in 2042. The bonds are callable at par in 2022.

On Wednesday, the Municipal Market Data scale ended steady for the second consecutive trading session. The 10-year yield finished flat at 1.48%, one basis point above the 1.47% record low set Nov. 28. The 30-year yield ended unchanged at 2.48%, dangling above its record low of 2.47% set Nov. 28. The two-year finished flat at 0.30% for the 48th consecutive trading session.

Treasuries continued to strengthen Thursday afternoon. The benchmark 10-year yield fell three basis points to 1.57% while the 30-year yield dropped four basis points to 2.75%. The two-year was steady at 0.25%.

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