The tax-exempt market continued to strengthen Wednesday afternoon as traders said deals in the primary market have been received very well.
"The market is stronger today by about two basis points," a New York trader said, adding that the New York City general obligation deal pricing for institutions is going well. He noted that retail order periods - including last week's New York City Municipal Water Finance Authority deal and Wednesday's Regents of the University of California deal - are all seeing very good reception. "It really has to be that people are starved for paper. These deals all have retail order periods and to see three deals come within a week-and-a-half and deals all do well is good news."
He continued that retail remains focused on the primary while the institutional market has turned to the secondary. "There is definitely retail interest in these deals. Retail only carries about the new issues, but not the secondary."
In the primary market, JPMorgan priced for retail $1.3 billion of Regents of the University of California general revenue bonds, rated Aa1 by Moody's Investors Service, AA by Standard & Poor's, and AA-plus by Fitch Ratings. Pricing details were not available by press time.
Morgan Stanley held preliminary pricing for $838.4 million of NYC GOs, following a two-day retail order period Monday and Tuesday. The bonds are rated Aa2 by Moody's and AA by Standard & Poor's and Fitch.
Yields on the first series of $500 million, ranged from 0.59% with a 5% coupon in 2016 to 3.561% with a 3.5% coupon and 3.45% with a 4% coupon in a split 2038 maturity. Bonds maturing in 2015 were offered via sealed bid. The bonds are callable at par in 2023. Yields were cut as much as seven basis points inside 2025 from retail pricing, but were increased as much as three basis points on maturities outside 2027.
Yields on the second series of $26.9 million, ranged from 0.45% with a 2% coupon in 2015 to 2.08% with a 5% coupon in 2022. Credits maturing in 2013 and 2014 were offered via sealed bid.
Yields in the third series of $223.1 million, ranged from 0.45% with a 2% coupon in 2015 to 3.391% with a 3.375% coupon in 2034. Credits maturing in 2014 were offered via sealed bid. The bonds are callable at par in 2023. Yields were lowered as much as seven basis points on maturities inside 2024 but were increased as much as two basis points on the 2027 and 2029 maturities.
Bonds in the fourth series of $10.1 million yielded 2.08% with a 5% coupon in 2022.
Bonds in the fifth series of $17.5 million yielded 1.08% with a 5% coupon in 2018.
Yields on the sixth series of $60.8 million, ranged from 0.59% with a 5% coupon in 2016 to 2.38% with a 5% coupon in 2024. Credits maturing in 2015 were offered via sealed bid. The bonds are callable at par in 2023.
JPMorgan is expected to price $262.7 million of University of Wisconsin Hospitals and Clinics Authority revenue bonds, rated Aa3 by Moody's and A-plus by Standard & Poor's.
In the competitive market, JPMorgan won the bid for $100 million of New York City GOs, rated Aa2 by Moody's and AA by Standard & Poor's. Prices were not yet available.
On Tuesday, municipal bond market scales finished stronger.
Yields on the Municipal Market Data triple-A GO scale ended lower. The 10-year yield plunged six basis points to 1.83% while the 30-year fell two basis points to 2.92%. The two-year closed at 0.31% for the sixth straight session.
Yields on the Municipal Market Advisors 5% coupon triple-A benchmark scale closed lower as well. The 10-year yield plunged six basis points to 1.84% while the 30-year yield fell two basis points to 3.00%. The two-year yield dropped one basis point to 0.33%.
Treasuries were mostly steady to slightly stronger Wednesday afternoon. The two-year and benchmark 10-year yields were flat at 0.25% and 1.88%, respectively. The 30-year yield fell one basis point to 3.07%.