Investors hit the municipal market Wednesday ready to buy.

They arrived anxious for new deals in the primary and new merchandise in the secondary, likely to get some last-minute trading in before the holiday week.

Even retail investors tagged along in search of the more attractive yields on offer, particularly those that developed on the long end, a trader in New York said.

"There were a few more bid-wanteds out there that helped from last week that were sold into the market where people were now offering out," he said. "You saw a little bit more supply in key areas. You might say supply was flat with the way it's been for the last week, but that the offerings were of a little higher quality than the stale stuff we've been seeing."

Tax-exempt yields were higher across all but the front of the curve Wednesday, according to the Municipal Market Data scale. Yields were steady in 2013 and 2014, but rose two basis points in 2012 and 2015. They were three and five basis points higher in 2016 and 2017, respectively. Beyond 2017, yields saw a six-basis-point jump.

The 10-year muni yield rose six basis points Wednesday to 2.25%, and 10 basis points in two days, after sitting at its all-time low for the previous three sessions.

The 30-year muni yield also vaulted six basis points to 3.88%. The two-year yield held at 0.30% for an 11th straight session, its lowest yield in more than 40 years.

The Treasury market pointed the way for muni yields: upward. The 10-year benchmark yield pogo-ed 15 basis points higher Wednesday to 2.30%.

The 30-year yield rocketed 17 basis points to 3.65%. The two-year yield even got in on the action, rising two basis points to 0.24%.

New issuance has been light this week, and little help the past few sessions to traders and other market participants looking to it for direction.

The industry estimates municipal bond sales of $3.65 billion versus a revised $4.72 billion last week. Still, a slew of moderately sized negotiated deals reached the market Wednesday that set an active tone.

As a case in point, investors devoured the $166.8 million deal for Houston combined utility system first-lien revenue refunding bonds, the trader said.

"That Houston deal was a giant food fight," he said. "It was pricey. Everybody was all over it, and desperately wanted that short-term debt in that state. To be able to launch a deal in this kind of market right now and do that well is terrific."

In one of the larger deals of the week, E.J. De La Rosa priced $383.2 million of San Francisco Airport Commission second series revenue refunding bonds. The bonds are rated A1 by Moody's Investors Service and A-plus by Standard & Poor's and Fitch Ratings. Prices were not available at press time.

JPMorgan priced for institutions $168.8 million of Rhode Island general obligation bonds in two series. The bonds are rated Aa2 by Moody's and AA by Standard & Poor's and Fitch.

Yields for the first series, $145 million of consolidated capital development loan, Series 2011A, range from 0.60% with a 2.00% coupon in 2013 to 4.33% with a 5.50% coupon in 2031. Credits maturing in 2012 were offered in a sealed bid.

Yields for the second series, $23.7 million of consolidated capital development loan refunding Series 2011B, range from 0.60% with a 4.00% coupon in 2013 to 0.97% with a 5.00% in 2015. Credits maturing in 2012 were offered in a sealed bid.

Yields for the first series rose 15 basis points at the front end of the curve from the retail pricing. Yields in the 10-year range jumped a whopping 34 basis points.

But given the state's issues, as well as the thrashing it's gotten lately in the press, the prices should have been even cheaper, the trader said. "It's got high unemployment; it's got no infrastructure to bring business in or put people back to work," he said. "It explains why these spreads are there."

JPMorgan also priced $168 million of Colorado Springs utilities system refunding revenue bonds. The bonds are rated Aa2 by Moody's, and AA by both Standard & Poor's and Fitch.

Yields range from 0.45% with a 3.00% coupon in 2013 to 4.20% with a 5.00% coupon in 2033. Debt maturing in 2012 was offered in a sealed bid.

Morgan Stanley priced $149.8 million of Ohio Building Authority state facilities refunding bonds in three series. The bonds were rated Aa2 by Moody's and AA by Standard & Poor's and Fitch.

Yields for the first series, $40.1 million of administrative building fund projects, range from 1.12% with a 4.00% coupon in 2015 to 3.54% with a 4.00% coupon in 2024. No more orders are being accepted for debt maturing in 2014, 2017, and 2019.

Yields for the second series, $100.4 million of adult correctional building fund projects, range from 0.88% with a 5.00% coupon in 2014 to 3.54% with a 5.00% coupon in 2024.

Credits maturing in 2012 were offered in a sealed bid. No more orders are being accepted for those credits maturing in 2013.

Yields for the third series, $9.4 million of juvenile correctional building fund projects, range from 0.88% with a 3.00% coupon in 2013 to 3.54% with a 3.25% coupon in 2024.

Some positive economic data provided the impetus for the flock to stocks, as new orders for durable goods jumped 4% in July due to an already-known flood of civilian aircraft orders.

"With orders rising and industrial production growing solidly, it is hard to believe a recession is around the corner," said Joel Naroff at Naroff Economic Advisors.

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