The tax-exempt market continued to grind higher as traders said deals in the new-issue market were very well received, and that demand was indicative of overall strength in the market.
"There is certainly some interest in deals today and secondary trading is firm," a New York trader said. "I think deals this week will be very well received."
He added the $125 million Pennsylvania Economic Development Financing Authority UPMC revenue bond deal was bumped five basis points. "That's indicative of interest out there."
The overall market traded about three basis points firmer, this trader said.
Siebert Brandford Shank & Co. held a second retail order period for $500 million of New York City GOs, rated Aa2 by Moody's Investors Service and AA by Standard & Poor's and Fitch Ratings. Institutional pricing is expected Wednesday. The city on Wednesday will auction a separate taxable competitive deal totaling $125 million.
In the second retail order period Tuesday, yields on the first series of $300 million ranged from 0.80% with a 3% coupon in 2016 to 4.24% with a 5% coupon in 2033 and are callable at par in 2023. Bonds maturing in 2015 were offered via sealed bid. Portions of bonds maturing between 2026 and 2030 were not offered for retail.
Yields were lowered one to two basis points from the first retail order period on bonds maturing between 2025 and 2033. Bonds with 5% coupons maturing between 2021 and 2033 were priced to yield 18 basis points to 22 basis points above Monday's double-A Municipal Market Data scale.
Yields on the second series of $179 million ranged from 0.80% with a 4% and 5% coupon in a split 2016 maturity to 2.26% with a 4% and 5% coupon in a split 2020 maturity. Bonds with 5% coupons were priced to yield six basis points to 16 basis points above Monday's double-A MMD scale.
Yields on the third series of $20.2 million ranged from 0.60% with a 5% coupon in 2016 to 2.11% with a 5% coupon in 2020. In a sign of demand, most bonds on this series were priced richer than Monday's double-A MMD scale, to yield between four and 14 basis points through the scale on bonds maturing between 2016 and 2019. Bonds maturing in 2020 were priced to yield one basis point above the scale.
In the competitive market, Bank of America Merrill Lynch won the bid for $121.6 million of triple-A rated Denver GO and refunding bonds.
Yields ranged from 0.16% with a 5% coupon in 2014 to 3.75% with a 4% coupon in 2030. The bonds are callable at par in 2023.
Demand for high-grade paper allowed B of A Merrill to price the bonds with 5% coupons maturing between 2014 and 2022 as much as five basis points richer than Monday's triple-A MMD scale.
On Monday, yields on the triple-A Municipal Market Data scale ended as much as three basis points lower. The 10-year yield fell one basis point to 2.59% and the 30-year yield dropped three basis points to 4.17%. The two-year was steady at 0.36% for the second session.
Treasuries continued to firm Tuesday afternoon. The benchmark 10-year yield slid six basis points to 2.65% and the 30-year yield fell five basis points to 3.68%. The two-year yield fell one basis point to 0.33%.
