Market Post: Muni Secondary Picks Up, Keeping Yields Flat

Traders in the tax-exempt market said the secondary was more active Wednesday as additional buyers and sellers jumped in to participate. Still, traders were hesitant to call the market stronger.

"There is a little better flow today but I would not say it's stronger," a New Jersey trader said. "In the secondary we are buying and trying to find certain spots, but we are selective."

As traders have said over the past few weeks, outflows out of municipal bond funds continue to weigh heavily on the market. "The Fed is on people's minds and so is Puerto Rico and Detroit. And with these outflows just continuing and continuing, it's hard to make the case for a firmer market even with Treasuries up."

This trader said deals in the primary market were going "just OK."

In the biggest deal Wednesday, JPMorgan priced $287.4 million of Alameda County Joint Powers Authority lease revenue bonds, rated Aa3 by Moody's Investors Service and AA by Standard & Poor's and Fitch Ratings.

Yields ranged from 1.99% with a 3% and 5% coupon in a split 2018 maturity to 5.22% with a 5.125% coupon in 2035. The bonds are callable at par in 2023. Yields were lowered between three and 10 basis points on bonds maturing between 2018 and 2024 from retail pricing.

Jefferies & Co. repriced $86 million of Philadelphia Municipal Authority city agreement revenue refunding bonds, rated A2 by Moody's and A-minus by Standard & Poor's.

Yields ranged from 0.40% with a 1.25% coupon in 2014 to 2.37% with a 5% coupon in 2018. Yields were lowered between two and five basis points from preliminary pricing.

Jefferies also priced $100 million of Suffolk County, N.Y., tax anticipation notes, rated SP-1 by Standard & Poor's and F-1 by Fitch. The notes yielded 0.55% with a 2% coupon in 2014.

In the competitive market, Bank of America Merrill Lynch won the bid for $115 million of Palm Beach County, Fla., School District TANs, rated MIG-1 by Moody's. The notes yielded 0.12% with a 4.5% coupon in 2014.

Tuesday, yields on the triple-A Municipal Market Data scale ended mostly unchanged. The 10-year and 30-year yields were steady at 2.99% and 4.48%, respectively. The two-year was steady at 0.43% for the 39th straight session.

Yields on the Municipal Market Advisors scale also ended mostly unchanged. The 10-year and 30-year yields were flat at 3.12% and 4.59%, respectively. The two-year closed unchanged at 0.55% for the 18th session.

Treasuries were stronger Wednesday afternoon. The two-year and benchmark 10-year yield fell two basis points each to 0.46% and 2.94%, respectively. The 30-year yield fell one basis point to 3.88%.

For reprint and licensing requests for this article, click here.
MORE FROM BOND BUYER