The municipal market secondary has quieted as managers of the week's largest deal held a second retail order period.
Tax-exempt yields on Wednesday appear to be faltering in the face of the apparent inactivity as retail investors hold their cash. Few, if any, long bonds grace trading screens, which are dominated by fragmented bid-wanteds, a trader in New Jersey said.
Nonetheless, a sturdy tone has carried over from last week's outperformance of Treasuries, traders say.
"We rallied from last week, and then we just calmed down," the trader said. "The
Long-term supply is likely stabilizing yields, traders say. Potential long-term volume is expected to pick up this week, to an estimated $4.88 billion.
Some help may be on the horizon. The Bond Buyer's 30-day visible supply for Wednesday shows $7.08 billion expected.
Few deals are scheduled to price Wednesday, with most due to arrive Thursday. JPMorgan, though, held a second retail order period for the week's biggest issue, $896.2 million of New York City Transitional Finance Authority tax-secured subordinate bonds in three series.
The bonds are rated Aa1 by Moody's Investors Service and AAA by Standard & Poor's and Fitch Ratings.
Yields in the first series, $505 million of tax-exempt subordinate bonds, ranged from 4.10% with a 5.00% coupon in 2035 to 4.46% with a 4.375% coupon in a split maturity in 2040. Credits maturing between 2016 and 2034, as well as in 2040, weren't offered to retail; debt maturing in 2015 was offered in a sealed bid.
Yields in the second series, $350 million of tax-exempt subordinate refunding bonds, ranged from 0.51% with coupons of 3.00% and 5.00% in a split maturity in 2016 to 3.90% with a 3.75% coupon in 2030. Credits maturing in 2014 and 2015 were offered in a sealed bid; those maturing in 2026 and 2028 weren't offered to retail.
Between the first and second retail order periods, yields on the second series were lowered two to three basis points in credits maturing in 2016 and 2017. They were raised one basis point for bonds maturing between 2022 and 2025.
For credits maturing in 2029 and 2030, yields were reduced by one basis point, while coupons were cut 12.5 basis points for both.
Yields in the third series, a $41.2 million remarketing, had yet to be updated for the second day of retail at press time. Bonds in all three series are callable at par in 2024.
The picture improved for the second day of retail, a trader in New York said. "They re-did a few of the coupons, which is great, as it might help retail get involved."
"The spread seems fair on the deal, so I'm sure they're going to get it done," a trader in New Jersey added.
On the competitive side of the market, Bank of America Merrill Lynch won $269.8 million of Florida Department of Transportation turnpike revenue bonds. They were rated Aa3 by Moody's and AA-minus by Standard & Poor's and Fitch.
Yields range from 0.20% with a 5.00% coupon in 2014 to 4.62% with a 4.50% coupon in 2043. The bonds are callable at par in 2023.
Yields on the Municipal Market Data triple-A scale Wednesday marginally weaker beyond three years on the curve. Bonds maturing beyond that point are flat to two basis points higher.
The 10-year triple-A yield rose one basis point Tuesday to 2.62%. The 30-year held at 3.98%, while the two-year remained unchanged at 0.34% for a seventh straight session.
Yields on the Municipal Market Advisors benchmark triple-A scale hovered Tuesday, rising and falling in select maturities across the curve by as much as one basis point. The 10-year triple-A yield held at 2.61%. The 30-year inched up one basis point to 4.19%, while the two-year remained at 0.33%.
Treasury yields Wednesday continue to rise, though the ascent has slowed since the morning. The 10-year yield has increased two basis points to 2.89%. The 30-year yield has climbed two basis points to 3.82%, while the two-year yield has risen one basis point to 0.40%.
