The focus in the tax-exempt market Tuesday was on the primary, where the week’s largest deals set a positive tone.
While traders said the primary market was well received, secondary activity was quiet and mixed, with both stronger and weaker trades.
“Primary deals seem to be going OK,” an Ohio trader said. “Deals are getting done at original levels with a few minor bumps on select maturities.”
A New Jersey trader said the secondary market took a backseat as several deals, including two large deals coming from New Jersey, were priced aggressively.
“I am hearing New Jersey is getting good reception,” the New Jersey trader said, referring to the New Jersey Transportation Trust Fund Authority deal. “It looks aggressive but it seems like it is getting interest. People are selective but then the new issues draw them out.”
He said the secondary was trading sideways as primary activity took the attention. “The secondary is bumped in price because things are priced aggressively in the primary. But the secondary is being ignored.”
Goldman, Sachs & Co. priced $877.5 million of New Jersey Transportation Trust Fund Authority transportation system bonds. The bonds are rated A1 by Moody’s Investors Service and A-plus by Standard & Poor’s and Fitch Ratings.
The first tranche — $539.3 million — was tax-exempt. Yields ranged from 0.38% with 3% and 5% coupons in a split 2014 maturity to 2.60% with a 5% coupon in 2024. Bonds maturing in 2013 were offered via sealed bid. Yields were lowered as much as three basis points from preliminary pricing.
The second — $338.2 million — was taxable. Bonds were priced at par with a 1.087% coupon in 2016 and a 1.758% coupon in 2018. The credits yielded 75 basis points in 2016 and 105 basis points in 2018 above the comparable Treasury yield.
Citi priced $690 million of New Jersey Turnpike Authority turnpike revenue SIFMA floating rate notes, rated A3 by Moody’s, A-plus by Standard & Poor’s, and A by Fitch. Pricing details were not available by press time.
Goldman repriced $374.7 million of Tennessee’s Metropolitan Government of Nashville and Davidson County general obligation improvement bonds, rated Aa1 by Moody’s and AA by Standard & Poor’s.
Yields ranged from 1.28% with a 5% coupon in 2020 to 2.94% with a 5% coupon in 2033. The bonds are callable at par in 2023.
JPMorgan priced $250 million of Novant Health Inc. taxable bonds for the Novant Health Obligated Group. The bonds are rated A1 by Moody’s, A-plus by Standard & Poor’s, and AA-minus by Fitch. The bonds were priced at par with a 4.371% coupon in 2043. The credit was priced 145 basis points above the comparable Treasury yield.
Some market participants said now that April 15 is behind us, money is being put back to work. “Ratios for munis have crept back over 100% and a stable bid side started showing back up Monday in munis,” said Dan Toboja, vice president at Ziegler Capital Markets. “Now that Tax Day has passed market participants are beginning to re-engage. Although there are a number of deals on the new issue side the market is feeling stable ahead of the pricings.”
In the secondary market, trades compiled by data provider Markit showed a mix of strengthening and weakening.
Yields on New Jersey Tobacco Settlement Financing Corp. 5s of 2041 jumped three basis points to 5.76% and Pennsylvania 4s of 2023 increased one basis point to 2.03%. Yields on California 5s of 2043 and Texas Tech University 5s of 2030 rose one basis point each to 3.67% and 2.79%, respectively.
Other trades were stronger. Yields on Cedar Hill, Texas, Independent School District 5s of 2025 dropped two basis points to 2.18%. Yields on New York’s Liberty Development Corp. 5.25s of 2035 and New Jersey Turnpike Authority 4s of 2043 fell one basis point each to 4.06% and 4.01%, respectively.
Municipal bond scales ended on a mixed note Tuesday after a firmer session Monday.
Yields on the Municipal Market Data triple-A GO scale ended as much as one basis point higher. The 30-year yield increased one basis point to 2.93%. The 10-year yield finished flat at 1.72% for the third session and the two-year closed steady at 0.29% for the eighth session.
Yields on the Municipal Market Advisors 5% coupon triple-A benchmark scale ended mixed, with some yields rising and some yields falling as much as one basis point in either direction. The 10-year was steady at 1.78% for the second session and the 30-year was flat at 3.05% for the third session. The two-year was flat at 0.32% for the eighth session.
Treasuries ended weaker Tuesday. The benchmark 10-year and 30-year yields increased three basis points each to 1.72% and 2.91%, respectively. The two-year yield rose one basis point to 0.23%.