The tax-exempt market suffered Wednesday afternoon as underwriters said deals were coming at concessions with balances left over.
While several deals have been postponed due to poor market conditions, the deals that did price were seeing mixed reception. "There are deals in Texas that have gotten done this week but at adjusted levels and probably wider spreads to the Municipal Market Data scale than you would normally think," said Pete Stare, an underwriter at FirstSouthwest. "There are probably a larger portion of balances on deals coming to market."
He added the recent selloff can be attributed to a combination of several factors. "The last two weeks have seen over $10 billion in new issuance and the buy side basically said they aren't paying these levels anymore. And we're getting down to the year-end and guys are taking the bid-side lower than they want to just to lighten positions."
In the primary market, Jefferies & Co. was expected to price about $650 million of Metropolitan Transportation Authority's Triborough Bridge and Tunnel Authority senior and subordinate revenue bonds.
The Authority postponed the deal until next year. It was originally expected to come to market last week and delayed due to market conditions. A spokesman for the Authority said the market was not digesting new issues and the Authority is waiting for better conditions. A final date has not yet been set.
JPMorgan delayed a planned the pricing of $162 million of Hillsborough County, Fla., Industrial Development Authority hospital revenue refunding bonds. Bank of America Merrill Lynch put off a $118 million of Oklahoma Municipal Power Authority power supply system revenue bond deal. Neither underwriter returned a call by press time.
On Tuesday, yields on the Municipal Market Data scale continued to soar. The 10-year yield jumped eight basis points to 1.82% while the 30-year yield spiked seven basis points to 2.86%. The two-year yield rose one basis point to 0.31% after holding steady at 0.30% for 56 consecutive trading sessions.
Since hitting record low yields on Nov. 28, the 10-year MMD yield has jumped 34 basis points while the 30-year yield has soared 38 basis points.
Treasuries were stronger Wednesday afternoon, though they pared most early morning gains. The benchmark 10-year yield fell three basis points to 1.80% while the 30-year yield dropped two basis points to 2.98%. The two-year yield fell one basis point to 0.28%.
