Traders said the competitive North Carolina general obligation bonds that came to market Wednesday were priced aggressively.
Morgan Stanley won the bid for the $321.1 million high-grade deal that's the largest competitive issuance this week.
"It's aggressive," a trader in Virginia said. "These decent sized AAA high-grade deals tend to catch a pretty high bid. The North Carolina deal caught a phenomenal bid."
The bonds were rated Aaa by Moody's Investors Service and AAA by both Standard & Poor's and Fitch Ratings. Yields ranged from 0.13% with a 5% coupon maturing in 2015 to 2.39% with a 5% coupon in 2025.
"I think North Carolina came in a bit on the aggressive side," a trader in North Carolina said.
The North Carolina trader said that the North Carolina deal came to market at such strong levels that he has seen some follow-up trading.
"There's been some follow-up trading in the 10-year," the trader in North Carolina said. "I did hear that 10-year maturities did go away to accounts."
The trader in Virginia said this week's low issuance contributed to the bonds' high pricing. Total potential volume scheduled for this week is $2.55 billion, according to data provided by Ipreo and The Bond Buyer.
"$2.5 billion is nothing, it's just been terrible," he said. "That's why there competitive deals can afford such aggressive scales."
A trader in Chicago said that most deals coming this week are being priced-up because issuance dropped from last week. Last week issuance totaled $4.4 billion according to Ipreo and The Bond Buyer.
"All the deals that have come to market are lower in yield than you would have seen a week ago," he said.
Traders do not see much else going on in the market this week.
"With Passover this week and Easter, a lot of participants are already thinking about the holiday," the trader in Chicago said.
The trader in Virginia predicts more muted trading late in the day Wednesday and on Thursday.
"I think that story right now and through tomorrow is that actively will grind slower and slower," he said. "By morning I think there will be very little going on. You've got all the parents taking their kids on Spring Break."
In the negotiated market, Raymond James & Associates Inc. will issue $197.5 million of revenue and refunding bonds for the New Jersey Educational Facilities Authority Wednesday. The bonds mature serially from 2015 through 2033 and are rated A1 by Moody's Investor Services, A by Standard & Poor's and A-plus by Fitch Ratings.
"The New Jersey deal is fairly priced given spreads in the market," the trader in North Carolina said. "I don't know if I've seen anything cheap, but that one is fairly priced."
Citigroup Global Markets won the bid for $150 million of consolidated public improvement bonds for Maryland's Washington suburban sanitary district Tuesday. Yields ranged from 0.10% with a 5% coupon maturing in 2015 to 3.76% with a 4% coupon in 2044.The bonds are callable at par in 2024 and are rated Aaa by Moody's and AAA by S&P and Fitch.
Municipal yields on bonds maturing beyond 2026 and those on the short-end of the curve steadied Wednesday afternoon. Yields for bonds maturing in 2022 through 2025 fell as much as two basis points, according to the Municipal Market Data triple-A scale.
Treasuries weakened Wednesday morning, with the 30-year yields rising two basis points to 3.47% and the two-year notes gaining one basis points to 0.38%.The 10-year benchmark was unchanged at 2.65%.
