Buyers continued to support the tax-exempt market Tuesday as primary deals were very well received and bonds for sale in the secondary were gobbled up.

Buyers pushed munis higher, forcing yields down lower to fresh record lows.

“There are a couple of primary deals in California and also a ton of bid-wanteds,” a Los Angeles trader said. “Crowds are back from Thanksgiving and there is a small window between business getting done for the next three weeks before the market shuts down again.”

He added primary deals are going well and there are plenty of buyers to meet the selling pressure in the secondary as traders look to lock in gains.

“People are looking to lock in profits and take gains in a big way before taxes go up. Tax levels are going to go up next year and we are seeing tax swap gain trades because of that. We are seeing huge blocks out with big institutional accounts and retail is involved in those trades as well.”

Traders in the morning also said there were enough buyers to match the bid-wanteds as some traders cleared inventory ahead of a big day in the primary.

“Munis are weird this morning,” a New York trader said. “There are lots of people putting out bid-wanted [lists] but there are still lots of buyers.” The trader added the market was trading flat in the morning session.

Other traders focused on Puerto Rico as fresh concerns arose about the commonwealth’s mounting debt load. “There is some buzz about a potential ripple effect from a possible Puerto Rico downgrade,” a New Jersey trader said.

Band of America Merrill Lynch priced for retail $491.6 million of Lower Colorado River Authority refunding revenue bonds, rated A1 by Moody’s Investors Service and A by Standard & Poor’s and Fitch Ratings. Institutional pricing is expected Wednesday.

The first series of $289.5 million was not offered for retail.

Yields on the second series of $202.1 million, ranged from 0.50% with a 3% coupon in 2014 to 3.52% with a 3.50% coupon in 2037. Bonds maturing in 2013 were offered via sealed bid. Credits maturing between 2026 and 2028, in 2031, 2032, and portions of 2037 were not offered for retail. The bonds are callable at par in 2022.

JPMorgan priced $256.3 million of Baltimore County, Md., taxable general obligation bonds, rated triple-A. The bonds were priced at par with a 0.416% coupon in 2014 to 3.739% coupon in 2042. Spreads ranged from 15 basis points to 130 basis points above the comparable Treasury yield.

B of A Merrill priced $250 million of Missouri Health and Educational Facilities Authority revenue bonds for Mercy Health. The bonds are rated Aa3 by Moody’s and AA-minus by Standard & Poor’s. Institutional pricing was accelerated a day to take advantage of demand.

Yields ranged from 1.75% with a 3% coupon in 2019 to 3.70% with a 4% coupon in 2042. The bonds are callable at par in 2022.

B of A Merrill priced $152.8 million of Lehigh County General Purpose Authority hospital revenue bonds for the Lehigh Valley Health Network. The bonds are rated A1 by Moody’s and A-plus by Standard & Poor’s.

Yields ranged from 0.50% with a 2% coupon in 2013 to 3.83% with a 4% coupon in 2043. The bonds are callable at par in 2022.

Jefferies & Co. priced for retail $110.7 million of Indiana Finance Authority state revolving fund program bonds, rated triple-A.

Yields ranged from 1.08% with a 3% coupon in 2020 to 2.54 with a 4% coupon and 2.31% with a 5% coupon in a split 2032 maturity. The bonds are callable at par in 2023.

In the competitive market, Barclays won the bid for $299.8 million of University of Washington revenue bonds, rated Aaa by Moody’s and AA-plus by Standard & Poor’s.

Yields ranged from 0.21% with a 2% coupon in 2013 to 3.25% with a 3.25% coupon in 2043. The bonds are callable at par in 2023.

In the secondary market, trades compiled by data provider Markit showed strengthening. Yields on New Jersey Turnpike Authority 5s of 2032 and Tampa, Fla. sales tax revenue 5s of 2025 fell three basis points each to 2.61% and 1.86%, respectively.

Yields on California Health Facilities Financing Authority 4s of 2039 and New Mexico State severance tax 4s of 2021 fell two basis points each to 3.66% and 1.41%, respectively. Yields on Pennsylvania 5s of 2022 fell one basis point to 1.63%.

The Municipal Market Data scale climbed higher Tuesday following a strong session Monday, setting more record lows. The 10-year MMD yield fell two basis points to 1.49%, a new record low. The 1.49% beat the previous record low of 1.50% set Nov. 16.

The 30-year MMD yield dropped three basis points to 2.40%, also setting a record low and beating the previous record of 2.52% set Monday. Before Monday, the record low was 2.54% set Nov. 16.

The two-year finished steady at 0.30% for the 42nd consecutive trading session.

Yields have plunged throughout the month of November. Since the start of the month, the 10-year MMD yield has fallen 23 basis points from where it started at 1.72% while the 30-year yield has fallen 33 basis points from where it started the month at 2.82%.

Treasuries were slightly stronger Tuesday. The benchmark 10-year yield fell two basis points to 1.64%. The two-year and 30-year yields dropped one basis point each to 0.27% and 2.79%, respectively.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.