The tax-exempt market posted steady gains Wednesday for the fourth consecutive trading session.
With several of the largest deals in the primary pricing, munis were stronger and many new-issues were oversubscribed.
“The market is higher,” a New York trader said. “People are bumping bonds and selling.”
The firmer sentiment was prevalent throughout Wednesday and the entire week, according to some traders.
“Things are OK,” a Philadelphia trader said. “Tone wise things feel a little bit better. There was a lot of activity Tuesday and today opened up with decent activity so it’s stronger but it’s not a free-for-all.”
He added the market felt stronger by one or two basis points.
“There are big deals coming today but when talking to the street and watching the tape, we are seeing cash out there still from January with coupon payments and maturities. And without a lot of negative muni news, we will probably have this optimism around putting money to work.”
He added as long as Treasury rates don’t make any big jumps, munis will stay range-bound.
In terms of overall supply, this trader added the five- to 15-year part of the curve is active and stronger by a few basis points, but there are very few offerings for bonds inside five years. “I haven’t seen any depth block-side bonds inside of five years since mid-December,” the trader said. “That area is sparse right now. But between five and 15 years there is depth and the tone is positive.”
In the primary market Wednesday, JPMorgan priced $715.5 million of Arizona Transportation Board subordinated highway revenue bonds, rated Aa2 by Moody’s Investors Service and AA-plus by Standard & Poor’s.
Yields on the first series, $602.8 million of tax-exempt debt, ranged from 1.37% with 3.5% and 5% coupons in a split 2020 maturity to 2.96% with a 5% coupon in 2038. The bonds are callable at par in 2022.
The second series, $112.7 million of taxable debt, were priced at bar ranging from a 0.499% coupon in 2014 to 2.179% coupon in 2020. Spreads ranged from 25 basis points to 60 basis points above the comparable Treasury yield.
Citi priced for institutions $500 million of New York Metropolitan Transportation Authority revenue bonds, rated A2 by Moody’s and A by Standard & Poor’s and Fitch Ratings.
In retail pricing Tuesday, yields ranged from 0.50% with a 2% coupon in 2014 to 3.39% with a 5% coupon in 2043. Bonds maturing in 2013 were offered via sealed bid. The bonds are callable at par in 2023. Institutional pricing was not available by press time.
Bank of America Merrill Lynch priced $303.6 million of Oregon taxable and tax-exempt general obligation bonds, rated Aa1 by Moody’s and AA-plus by Standard & Poor’s and Fitch.
The taxable pricing consisted of $175.1 million of bonds in two series.
The first series of $131 million were priced at par to yield from 0.23% in 2014 to 4.012% in 2035. Spreads ranged from 15 basis points to 175 basis points above the comparable Treasury yield.
The second series of $44.1 million were priced at par to yield from 0.32% in 2014 to 4.012% in 2035. Spreads ranged from 15 basis points to 175 basis points above the comparable Treasury yield.
The tax-exempt pricing consisted of $128.5 million of bonds in two series.
Yields on the first series of $101 million ranged from 0.25% with a 3% coupon in 2014 to 2.86% with a 5% coupon in 2042. The bonds are callable at par in 2023.
Yields on the second series of $27.5 million ranged from 0.25% with a 2% coupon in 2014 to 3.23% with a 3.125% coupon in 2036. The bonds are callable at par in 2023.
In the competitive market, Bank of America Merrill Lynch won the bid for $250 million of North Carolina limited obligation revenue bonds, rated Aa1 by Moody’s and AA-plus by Standard & Poor’s and Fitch.
Yields ranged from 0.27% with a 5% coupon in 2014 to 3.12% with a 3% coupon in 2033. The bonds are callable at par in 2023.
In the secondary market, trades compiled by data provider Markit showed firming. Yields on Arizona’s Salt River Project Agricultural Improvement and Power District 5s of 2027 dropped five basis points to 2.12% while Ohio’s Buckeye Tobacco Settlement Financing Authority 5.125s of 2024 dropped four basis points to 6.06%.
Yields on Chester County, Pa., 5s of 2030 and Louisiana Citizens Property Insurance Corp. 5s of 2020 dropped three basis points each to 2.20% and 1.64%, respectively. Yields on New York City Transitional Finance Authority 5s of 2031 fell one basis point to 2.39%.
On Wednesday, the Municipal Market Data scale ended higher for the fourth consecutive trading session. The 10-year and 30-year yields fell three basis points each to 1.65% and 2.69%, respectively. The two-year finished steady for the second session at 0.33%.
The 10-year yield still remains 18 basis points above its record low of 1.47% set Nov. 28. The 30-year yield trades 22 basis points above its record low of 2.47% set Nov. 28.
Treasuries ended slightly stronger Wednesday for the fourth trading session. The benchmark 10-year yield and the 30-year yield fell one basis point each to 1.82% and 3.01%, respectively. The two-year was steady at 0.25%.
