The tax-exempt market strengthened for a sixth session Tuesday as the week’s largest deals were met with positive reception in the primary market and secondary bonds traded higher.
Connecticut and New York’s Metropolitan Transportation Authority sold the week’s largest deals for retail. “The MTA deal looks OK and priced at plus 80 basis points to the scale,” a New Jersey trader said. “So new issue product is still doing OK.”
Siebert Brandford Shank & Co. priced for retail $600 million of Connecticut special tax obligation debt for transportation infrastructure financing. The bonds are rated Aa3 by Moody’s Investors Service and AA by both Standard & Poor’s and Fitch Ratings. Institutional pricing is expected Wednesday.
By Tuesday afternoon, retail had placed $155 million in orders.
Yields ranged from 0.60% with a 3% and 5% coupon in a split 2016 maturity to 4.25% priced at par in 2033. Bonds maturing in 2014 and 2015 were offered via sealed bid. Portions of bonds maturing between 2025 and 2033 were not offered for retail. The bonds are callable at par in 2023. Spreads ranged from five basis points to 38 basis points above Monday’s Municipal Market Data scale.
Goldman, Sachs & Co. priced for retail $618.1 million of New York’s Metropolitan Transportation Authority in two parts, rated A2 by Moody’s and A by Standard & Poor’s. The pricings will consist of $500 million and $130 million. Institutional pricing is expected Wednesday.
Yields on the first pricing of $500 million ranged from 0.50% with 3% and 5% coupons in a split 2015 maturity to 4.86% with a 5% coupon in 2043. Bonds maturing in 2014 were offered via sealed bid. The bonds are callable at par in 2023.
Yields on the second pricing of $118.1 million ranged from 3.23% with a 5% coupon in 2023 to 3.91% with a 5% coupon in 2027. The bonds are callable at par in 2023.
In the secondary market Tuesday, the New Jersey trader said bonds issued last week were trading higher. “Healthcare deals that came last week traded up.”
With the focus on the primary deals, the secondary market took a backseat. “Secondary activity has slowed today,” a Chicago trader said. “It feels a bit stronger. It’s flat on the shorter end but stronger out long.”
Puerto Rico bond prices have been steadily climbing since commonwealth officials held an investor call Oct. 15 to reassure investors of its financial stability. “There is a lot more strength in Puerto Rico these days. It’s coming back a little bit,” the Chicago trader said.
Still, as yields fell, some traders were hesitant to buy much more. “We are coming back into hesitation at these lower yields,” the New Jersey trader said. “The market is OK and it’s grinding higher but we are having a little resistance.”
Trades compiled by data provider Markit showed firming. Yields on Richland County, S.C., School District 5s of 2023 slid four basis points to 2.52%.
Yields on Wisconsin 5s of 2019 and Orlando and Orange County, Fla., Expressway Authority 5s of 2030 slid three basis points each to 1.54% and 4.30%, respectively.
Yields on MTA 5s of 2025 and Indiana State Finance Authority 5s of 2040 fell one basis point each to 3.61% and 5.73%, respectively.
In other primary market deals, Goldman also priced $549.4 million special revenue bonds from the Nevada Unemployment Compensation Fund. The bonds are rated triple-A by Moody’s and Standard & Poor’s and AA-plus by Fitch.
Yields ranged from 0.23% with a 2% coupon in 2014 to 1.00% with a 5% coupon in 2018. Bonds maturing in 2018 are callable at par in 2017.
Bonds maturing in June between 2015 and 2017 were priced between one basis point richer and one basis point cheaper than Monday’s MMD scale. Bonds maturing in December between 2014 and 2017 were priced with spreads ranging from five basis points to 12 basis points above the scale.
Yields on the triple-A Municipal Market Data scale ended as much as five basis points stronger. The 10-year yield slid four basis points to 2.44%. The two-year and 30-year yields fell one basis point each to 0.34% and 4.05%, respectively.
Over the past six sessions of gains, the 10-year yield has dropped 17 basis points and the 30-year yield has fallen 18 basis points. The two-year slid one basis point over the past six sessions.
Yields on the Municipal Market Advisors benchmark scale ended as much as three basis points firmer. The 10-year slid one basis point to 2.62%. The two-year and 30-year yields were steady for the third session at 0.53% and 4.23%, respectively.
In the most recent rally that began last Tuesday, the 10-year MMA yield has fallen 14 basis points and the 30-year yield has slipped 12 basis points. The two-year yield slid two basis points in six consecutive trading sessions.
Treasuries were mixed. The benchmark 10-year yield slid one basis point to 2.51% while the 30-year yield rose one basis point to 3.62%. The two-year was steady at 0.32%.