A lull continued over the municipal market at midday Wednesday with low yields an obstacle to getting investors interested.
"It's dead as a doornail," said a New York trader. "We're all just waiting to see what happens with the Fed."
He said the light trading he observed through noon was off slightly from Tuesday.
"It's very quiet going into the midday," agreed a New Jersey trader. "We have a lot of wood to chop to get levels to where there is appetite in the market."
He said the pending outcome of the Federal Open Market Committee meeting was still weighing heavily on the market and preventing normal trading activity.
He hoped the meeting announcement, expected at 2 p.m. EST, would help refocus the market.
"We are having a tough time getting anyone interested in any bonds," the New Jersey trader said.
At midday, municipal yields were virtually unchanged.
Maturities between 2015 and 2020 were steady, while maturities between 2021 and 2044 were cut between zero and as much as three basis points, according to MMD.
Meanwhile, Treasuries were also quiet at midday, as yields in 10 years rose to 2.320%, from 2.305%, and the 30-year to 3.090% from 3.084% at the start of the day.
Traders said nonrated bonds from Tuesday's $1.6 billion New York City Development Corporation offering for the 3 World Trade Center Tower project were expected to be free to trade later Wednesday, but there was little anticipation in the secondary market for the speculative grade paper.
"It's not something there will be a ton of trading in," the New York trader said of the deal, which was priced by Goldman, Sachs & Co. and is the largest nonrated deal in municipal history, according to Bloomberg.
"It's more for the big guys and there's not a lot of retail on that," he said.
The deal was sold through a private placement agreement with "qualified" investors and was not expected to have an impact on municipal scales.
The highest yielding bonds in the offering are the Class 3 bonds which had a 7.25% coupon in a 2044 maturity that is subject to an optional par call in 2024 and a sinking fund.
In other activity, a $213.43 million revenue sale from the General Authority of Southcentral, Pa., was also expected to be free to trade Wednesday afternoon.
The offering, on behalf of the Wellspan Health Obligation Group, was priced on Tuesday by Morgan Stanley & Co. to offer yields ranging from 0.12% in 2015 with a 3% coupon to 3.70% in 2044 with a 5% coupon, according to the trading wire. The bonds are rated Aa3 by Moody's Investors Service, and AA-minus by Fitch Ratings.
The deal was considered attractive given that the triple-A generic GO scale in 2044 ended at 2.96% at the close of trading on Tuesday, according to MMD.
