The tax-exempt market started trading on a heavy note Wednesday, before traders cut bond prices to lighten the load.
After some of the week’s largest deals hit the primary Tuesday, traders said activity was slow.
“It’s fairly quiet,” a New York trader said. “We see some stuff out for the bid, but nothing that would get the blood pumping. There’s really no primary market to speak of today.”
One Chicago trader said trading has been slow all week. “It feels like the end of the month lull and people are waiting for money to come due and into their accounts on the first,” he said. “If it’s not flat, it’s weaker. But with this activity it looks flat.”
Some bond prices were cut Wednesday morning to keep in line with California State Public Works Board bonds issued Monday, the New York trader said.
“With all the cuts on the street, activity naturally has to slow down,” he said. “Clients also have money tied up in allotments from new issues earlier this week so that’s playing a part on why it’s quiet out there.”
The little trading that was occuring took place on bonds maturing in more than 20 years, this trader said.
In the primary, Bank of America Merrill Lynch is expected to price $235 million of Bay Area Toll Authority toll bridge revenue bonds, rated Aa3 by Moody’s Investors Service, AA by Standard & Poor’s, and AA-minus by Fitch.
The first series, $125 million of 2006 remarketing bonds, was priced 90 basis points above the Securities Industry and Financial Markets Association index for 2045 maturities. The bonds are callable at par in 2022.
The second series, $110 million of 2008 remarketing bonds, was priced 90 basis points above the SIFMA index maturing in 2045. The bonds are callable at par in 2022.
The third series, $50 million of 2007 remarketing bonds, was priced 90 basis points above the SIFMA index maturing in 2047. The bonds are callable at par in 2022.
FirstSouthwest priced $148.4 million of taxable and tax-exempt Lubbock, Texas, general oblication bonds. The bonds are rated Aa2 by Moody’s and AA-plus by Standard & Poor’s and Fitch.
The tax-exempt portion of $108.6 million was divided into two series. Yields on the first series, $61.3 million of GO refunding and improvement bonds, ranged from 0.57% with a 2% coupon in 2016 to 3.51% with a 3.375% coupon in 2033. Credits maturing between 2013 and 2015 were offered via sealed bid. The bonds are callable at par in 2023.
Yields on the second series, $47.4 million of tax and waterworks system surplus revenue certificates of obligation, ranged from 0.57% with a 3% coupon in 2016 to 2.99% with a 5% coupon in 2033. Bonds maturing in 2014 and 2015 were offered via sealed bid. The bonds are callable at par in 2023.
The taxable portion of $39.7 million had maturities that ranged from 2013 to 2021 with spreads of 35 basis points to 66 basis points above the comparable Treasury yield.
Wells Fargo priced $96.2 million of Jacksonville, Fla., Electric Authority revenue bonds.
Bonds in the first series, $7.6 million of electric system revenue bonds, were rated Aa2 by Moody’s, AA-minus by Standard & Poor’s, and AA by Fitch. Yields ranged from 1.94% with a 1.875% coupon in 2021 to 3.90% with a 4% coupon and 2.78% with a 5% coupon in a split 2038 maturity. The bonds are callable at par in 2018.
The second series, $88.6 million of electric system subordinated revenue bonds, were rated Aa3 by Moody’s, A-plus by Standard & Poor’s, and AA by Fitch. Yields ranged from 0.57% with a 2% coupon in 2015 to 4% priced at par in 2038. The bonds are callable at par in 2018 except portions of bonds maturing between 2024 and 2037 which are callable at par in 2022. Credits maturing in 2019 and 2021 are not callable.
In the secondary market, trades compiled by data provider Markit showed a mix of strengthening and weakening.
Yields on San Antonio electric and gas 5s of 2022 and New Jersey State Turnpike Authority 5s of 2038 increased two basis points each to 1.73% and 3.53%, respectively.
Yields on North Carolina Medical Care Commission 4s of 2046 and Ector County, Texas, Independent School District 3.25s of 2034 rose one basis point each to 4.18% and 3.45%, respectively.
Still, other trades were stronger. Yields on Ohio’s Buckeye Tobacco Settlement Financing Authority 5.125s slid three basis points to 6.13% and Tennessee Energy Acquisition Corp. 5s of 2020 fell two basis points to 2.68%.
Municipal bond scales ended steady to one basis point weaker Wednesday after a similar read Tuesday.
Yields on the Municipal Market Data 5% triple-A GO scale as much as one basis point weaker. The 10-year was steady at 1.70% for the sixth session and the 30-year closed unchanged at 2.90% for the fourth trading session. The two-year closed steady at 0.29% for the 14th session.
Yields on the Municipal Market Advisors 5% scale also ended flat to one basis point higher. The 10-year yield rose one basis point to 1.77%. The 30-year closed unchanged at 3.02% for the fifth session and the two-year was flat at 0.32% for the 14th session.
The Treasury yield curve flattened Wednesday. The benchmark 10-year and 30-year yields fell one basis point each to 1.70% and 2.89%, respectively. The two-year yield increased one basis point to 0.24%.
