The tax-exempt market saw a flurry of competitive deals hit the market Tuesday though traders said activity remained relatively quiet throughout the day.
"I'm seeing some things on Bloomberg but it's still a little slow," a San Francisco trader said. "We aren't paying attention to the new issues because it's not the right structure for us." This trader said he looks at 5% coupon bonds with shorter call structures.
"You can find some 5% coupon bonds but prices seem to be a little full for what we are willing to pay," he said. "We want to be defensive given where we are with rates now."
The new issues Tuesday were bringing out some activity in the secondary and the trader said the market was about flat.
Other traders agreed the market seemed quiet. "It's very quiet," a New York trader said. "People are waiting on the new deals, plus all the offerings have been bumped a bunch since the rally last week." He added the market is taking a breather until new bonds, which may come cheaper, hit the market.
The competitive market took most of the attention Tuesday. Triple-A rated Washington Suburban Sanitary District in Maryland auctioned $252.3 million of consolidated public improvement bonds in two pricings: $150 million and $102.3 million.
JPMorgan won the bid for $150 million. Yields ranged from 0.22% with a 3% coupon in 2014 to 2.70% with a 4% coupon in 2032. The bonds are callable at par in 2023. Yields on maturities with 5% coupons were priced two basis points above Monday's Municipal Market Data scale.
Bank of America Merrill Lynch the bid for $102.3 million. Yields ranged from 0.21% with a 2% coupon in 2014 to 2.51% with a 2.25% coupon in 2026. The bonds are callable at par in 2023. Yields on the 2018 maturity with a 5% coupon were priced two basis points above Monday's MMD scale while the 2019 5% coupon maturity was priced right on the scale.
New Jersey Health Care Facilities Financing Authority auctioned $243.34 million of revenue bonds in two pricings: $173 million and $70.34 million.
Barclays won the bid for $173 million of lease revenue refunding bonds for the Greystone Park Psychiatric Hospital. B of A Merrill won the bid for $70.34 million. Prices were not available by press time.
B of A Merrill won the bid for $191.4 million of New York City Transitional Finance Authority recovery bonds, rated Aa1 by Moody's Investors Service and AAA by Standard & Poor's and Fitch Ratings.
Yields ranged from 0.18% with a 4% coupon in 2013 to 1.85% with a 5% coupon in 2022. Yields on 5% coupon bonds ranging from 2015 to 2022 were priced 14 basis points to 30 basis points above Monday's MMD scale.
Triple-A rated Wake County, N.C., auctioned $176.5 million of general obligation bonds in two pricings: $125.3 million and $51.2 million.
JPMorgan bought the first series of $125.3 million of general obligation public improvement bonds. Yields ranged from 0.20% with a 3% coupon in 2014 to 2.70% with a 4% coupon in 2032. The bonds are callable at par in 2023. Bonds maturing in 2016 with a 5% coupons were priced one basis point lower to Monday's MMD scale while bonds maturing between 2017 and 2022 with 5% coupons were priced two basis points above the scale.
Citi won the bid for $51.2 million of GO school bonds. Yields ranged from 0.20% with a 3% coupon in 2014 to 3.15% with a 3% coupon in 2032. The bonds are callable at par in 2023. Bonds with 5% coupons were priced right on Monday's MMD scale.
In the negotiated market, JPMorgan priced $230.9 million of Tarrant County Cultural Education Facilities Finance Corp. hospital revenue bonds for the Baylor Health Care System in a tax-exempt and taxable series. The bonds are rated Aa3 by Moody's and AA-minus by Standard & Poor's.
Yields on the first pricing of $167.9 million of tax-exempts ranged from 3.55% with a 3.375% coupon in 2028 to 4.10% with a 4% coupon in 2043. The bonds are callable at par in 2023.
The second pricing of $63 million of taxable bonds were priced 150 basis points above the comparable Treasury yield maturing in 2043.
In the secondary market, trades compiled by data provider Markit showed mostly weakening.
Yields on Lower Colorado River Authority in Texas 4s of 2039 jumped four basis points to 4.08% and Wylie, Texas, Independent School District 0s of 2028 rose two basis points to 3.45%.
Yields on New York City Municipal Water Finance Authority 5s of 2034 jumped two basis points to 3.10% while New Jersey State Turnpike Authority 5s of 2038 rose one basis point to 3.55%.
Yields on Ohio's Buckeye Tobacco Settlement Financing Authority 5.125s of 2024 and California 5s of 2042 increased one basis point each to 6.09% and 3.72%, respectively.
Municipal bond scales ended as much as one basis point weaker Tuesday after a steady to slightly firmer tone Monday.
Yields on the Municipal Market Data triple-A GO scale as much as one basis point higher. The 10-year and 30-year yields increased one basis point each to 1.72% and 2.94%, respectively. The two-year closed steady at 0.29% for the third session.
Yields on the Municipal Market Advisors 5% coupon triple-A benchmark scale ended as much as one basis point higher. The 30-year yield increased one basis point to 3.05%. The two-year and 10-year yields were steady at 0.32% and 1.79%, respectively, for the third session.
Treasuries weakened Tuesday for the second session this week. The benchmark 10-year yield increased two basis points to 1.76% and the 30-year yield jumped three basis points to 2.94%. The two-year was steady at 0.23%.
