New deals auctioned in the competitive market were well received Wednesday, with richer prices offered than the general benchmark scales and few balances remaining, a sign of strength in an overall weaker market.
Three triple-A issuers sold bonds with yields steady to firmer than Tuesday’s triple-A Municipal Market Data benchmark scale even as traders said the secondary market felt weaker.
Morgan Stanley won the bid for $209.5 million of triple-A Texas A&M University System bonds. Yields ranged from 0.15% with a 3% coupon in 2014 to 4.01% with a 4% coupon in 2033. Bonds with 5% coupons maturing between 2015 and 2018 were priced between three and eight basis points richer than Tuesday’s MMD scale. Bonds with 5% coupons maturing between 2020 and 2023 had spreads ranging from two to four basis points above the scale.
“The A&M’s were pretty much pre-sold before the award,” a New York trader said. “Only balances are left on the 2022 and the 2023 maturity.”
Bank of America Merrill Lynch won the bid for $172.7 million of triple-A Georgia general obligation bonds. Yields ranged from 0.17% with a 5% coupon in 2014 to 4.04% with a 4% coupon in 2033. The bonds are callable at par in 2023. Yields on bonds maturing in 2014 were priced one basis point richer than Tuesday’s MMD scale. Bonds with 5% coupon maturing between 2015 and 2023 were priced on the scale.
“Most of the Georgia bonds are gone,” the trader said, adding about $30 million was left across five maturities.
Citi won the bid for $295 million of triple-A Montgomery County, Md., GOs. Yields ranged from 0.17% with a 5% coupon in 2014 to 4.04% with a 4% coupon in 2033. The bonds are callable at par in 2023. Bonds with 5% coupons maturing between 2014 and 2018 were priced as much as four basis points richer than the MMD scale. Yields on bonds maturing between 2020 and 2026 were priced on the scale.
Citi also won the bid for a second pricing of $25.4 million of Montgomery County GOs. The bonds yielded 2.623% with a 5% coupon in 2023 and 2.78% with a 5% coupon in 2024. The bonds are callable at par in 2023. The bonds were priced right on the scale.
Market participants focused on the secondary market said activity was quiet as traders eyed primary deals. “It’s a trade by appointment day,” a New Jersey trader said. “The stock bids are not out here. Maybe it’s apathy and guy are sitting on their hands waiting for the new deals to come.”
In the secondary market, trades compiled by data provider Markit were mixed. Yields on California’s Golden State Tobacco Securitization Corp. 5s of 2030 jumped 10 basis points to 4.75% and Massachusetts Health and Educational Facilities Authority 5s of 2041 rose three basis points to 5.09%.
Yields on Puerto Rico Sales Tax Financing Corp. 5.25s of 2041 and New Jersey Transportation Trust Fund Authority 5.25s of 2019 rose one basis point each to 7.46% and 2.18%, respectively.
Other trades were stronger. Yields on California Statewide Communities Development Authority 5s of 2042 fell two basis points to 5.07% and Dormitory Authority of the State of New York 5s of 2032 fell three basis points to 4.12%.
On Wednesday, the triple-A Municipal Market Data scale ended flat after two weaker sessions. The 10-year yield and 30-year yields were flat at 2.62% and 4.16%, respectively. The two-year was steady for the 11th session at 0.34%.